Shanda Games Shares Surged: 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 online gaming outfit Shanda Games (NAS: GAME) scored today, soaring as much as 12.6% overnight on moderate volume.

So what: The former gaming division of Shanda Interactive (NAS: SNDA) has precious little news of its own to explain today's move. However, the stock has been drawn and quartered over the last few days (and 2011 in general) amid worries about a slowing Chinese economy and the wholesale replacement of several top executives. Since the company didn't die from any of these events, there's a combination of relief rally and bargain hunting going on.

Now what: This miniature, Chinese version of Activision Blizzard (NAS: ATVI) looked cheap in August and is even less expensive today. MMORPG games continue to attract huge audiences worldwide, and Shanda Games is a direct bet on that model's continued success in China. Don't let this little jump scare you off -- shares are now back to prices not seen since Friday and are trading for less than six times trailing earnings.

Interested in more information about Shanda Games? Add it toMy Watchlist.

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