Why Did My Stock Just Die?
CAPS Rating(out of 5)
|Yingli Green Energy (NYS: YGE)||***||(15.1%)|
|Sohu.com (NAS: SOHU)||***||(12.5%)|
|Changyou (NAS: CYOU)||***||(12.2%)|
With the markets falling 276 points yesterday, or 2.3%, stocks that went down by even larger percentages are pretty big deals.
Blotting out the sun
Chinese solar companies have a black cloud hanging over them. The story arc Solyndra backers have been peddling since its bankruptcy filing is that massive subsidies paid by the Chinese government to its domestic solar shops brought about the U.S. company's demise.
Ignoring the subsidies our own government has handed out to the U.S. solar industry -- even infamously to Solyndra -- seven U.S. solar panel companies filed a complaint with the International Trade Commission and the Commerce Department alleging the Chinese shops were dumping product on the market and depressing prices. They want the Obama administration to impose a 100% tariff on Chinese solar imports.
The market is now wary of their prospects, and Yingli Green Energy, Trina Solar (NYS: TSL) , and Suntech Power (NYS: STP) fell as a result. Yet because even First Solar (Nasda: FSLR) fell after an analyst downgrade, I think there's something far worse at work here in the market's psyche, which is that solar won't be successful without being the government's handmaiden. Unless the taxpayers are propping up these companies, they won't make it, and in times of austerity, there's less willingness to shovel money their way. That could be why the entire CAPS Solar Power sector matched the market's decline yesterday, dropping 2.3%
The CAPS community is still supportive of Yingli at the moment, as 96% of those rating the Chinese solar shop believe it will outperform the broad market indexes. Put Yingli Green Energy on your watchlist and see if it will be one of those to come out from behind the clouds.
No Duke Nukem
With Chinese Web portal Sohu.com sinking along with its online game subsidiary Changyou, at least one analyst has suggested it was due to the poor showing of its new game introduction, Duke of Mount Deer. Although this is not necessarily a stretch, there is a lot of conjecture built into the assumption, since Sohu doesn't break out revenues by game. That left analysts having to interpret the chicken bones of comments made by Sohu's CEO, who said Duke was popular among hardcore gamers while causal ones found the complexity of game play too challenging.
A more likely cause was the margin compression Sohu experienced as operating expenses soared 66%, far outstripping the 42% increase in revenues.
Chinese Internet portal Baidu (Nasda: BIDU) reported blowout earnings, which makes the inroads made by Sohu's Sogou search engine irrelevant. Revenue there jumped 244% from the year-ago period and increased 35% sequentially.
Still, for much of its business, CAPS member jacelsus400 finds Sohu is without peer.
No competion worth mentioning in China. Direct access through TV, i.e., no other intervening device. Thus, simplicity is key. Has no significant problems with the government, like SINA, with fiscalization, because it uses what has already been censored.
Despite the criticism over Duke, Changyou saw revenues jump 39% year over year, which surpassed the 32% increase in expenses that were needed to support its new game introductions. But sales and market expenses more than doubled from last year, and net profits and margins slid significantly.
Over 93% of the 187 CAPS members rating Changyou believe it will go on to outperform the market averages. You can add the Chinese online gaming company to the Fool's free portfolio tracker, then head over to the Changyou CAPS page and let us know whether it can still build a future for itself.
At the time this article was published Fool contributorRich Dupreyholds no position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool owns shares of First Solar.Motley Fool newsletter serviceshave recommended buying shares of First Solar, Baidu, and Sohu.com. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.