Why Sohu.com Shares Dropped Today

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Chinese gaming and search company Sohu.com fell 16% today after the company reported earnings.

So what: Third-quarter revenue rose 29% to $368 million and net income dropped 23% to $41.1 million. After accounting for net income to non-controlling shareholders, the company actually lost $64.2 million, or $1.69 per share.  

Now what: The one surprising number was an expectation of a 0%-4% decline in brand advertising revenue. Organic growth just doesn't appear to be as strong as the top-line numbers seem, and with another loss of $0.30-$0.35 per share expected again next quarter, I just don't see this as a buying opportunity. I'll sit out this move because I'm just not willing to speculate on a Chinese gaming company making a profit.

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The article Why Sohu.com Shares Dropped Today originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends Sohu.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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