SouFun Shares Popped: What You Need to Know


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 real estate portal and home improvement e-tailer SouFun (SYNE: SFUN) opened today's trading 18.8% above Wednesday's closing price, then swiftly retreated to a modest 4% gain -- all on a couple of big volume spikes.

So what: The just-reported second quarter came in strong with revenue doubling year-over-year and earnings growing more than fivefold. Analyst estimates weren't even close.

Now what: Before declaring SouFun the (NAS: BIDU) and the return of the flagging Chinese real-estate market, you should consider that this leap amounts to very little in the larger perspective. Even at the opening-bell peak, the gains merely moved the stock back to August 1 values. Investors are still worried about the possibility of a Chinese housing bubble, and rightly so. Buying Far Eastern real-estate plays -- with or without an online component -- such as SouFun, China Security & Surveillance Technology (NYS: CSR) , or Xinyuan Real Estate (NYS: XIN) seems more like gambling than investing. The potential gains may be great but so are the risks.

Interested in more info on SouFun? Add it to your watchlist.

At the time thisarticle was published Fool contributor Anders Bylund holds no position in any of the companies discussed here. Motley Fool newsletter services have recommended buying shares of Baidu. 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 is investors writing for investors.

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