Why Youku Tudou Shares Plunged, Then Recovered


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 Youku Tudou plunged today by as much as 11%, before recovering to close down just 2%, after the company reported earnings.

So what: Revenue in the fourth quarter came in at $102.1 million, which translated into adjusted loss per share of $0.11. Both figures topped consensus forecasts, and this was the first full quarter since Youku and Tudou merged. CEO Victor Koo said that the integration process is proceeding well, and expects to see more cost synergies later this year.

Now what: Guidance in the first quarter expects revenue in the range of $77.1 million to $83.6 million, based on current exchange rates. That outlook was well below consensus forecasts, but some of the shortfall was likely related to internal restructuring that the company will work through. Goldman Sachs is keeping its "buy" rating on the stock, saying the negative effects of integration should be overcome within two quarters, and that the long-term picture remains intact.

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The article Why Youku Tudou Shares Plunged, Then Recovered originally appeared on Fool.com.

Fool contributor Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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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