Why Youku Tudou Shares Got a Black Eye Today
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 lost over 8% of their value by the end of the day -- a slight recovery from intraday lows that shaved as much as 12% off the stock's value -- as investors had trouble reconciling the company's middling earnings results with their own expectations of high growth.
So what: Youku's second-quarter results came in as somewhat of a mixed bag. The company recorded a $0.10 loss per share, better than the Thomson Reuters analyst consensus of a $0.12 loss per share. On the other hand, the company's revenue -- reported at $122.8 million and 30% higher year over year -- very narrowly missed the $122.9 million consensus.
Now what: Analysts more or less shrugged their shoulders at the report while continuing to look ahead at Youku's potential. Wedge Partners analyst Juan Lin called the results "good but not great." Nomura analysts believe that the company will continue to expand its margins as the two Chinese online companies that came together last year finalize their consolidation. Citi analyst Muzhi Li also highlighted positive margin momentum, which could be a "critical step to breakeven" in the second half. ABR's Henry Guo raised his price target to $30, nearly 30% higher than today's close.
This is still very much a growth stock with a Chinese flavor, which means that investors will need to tread with extra caution around Youku's financial filings to be certain that they understand what's going on beneath the hood. The stock has had a hard time breaking out of a rather narrow trading range over the last year, and it might have a bit further to fall before the market has made up its mind. That doesn't mean that you should avoid it -- but make sure you've done your homework.
Want more news and updates? Add Youku Tudou to your Watchlist now.
Tired of watching your stocks creep up year after year at a glacial pace? Motley Fool co-founder David Gardner, founder of the No. 1 growth stock newsletter in the world, has developed a unique strategy for uncovering truly wealth-changing stock picks. And he wants to share it, along with a few of his favorite growth stock superstars, WITH YOU! It's a special 100% FREE report called "6 Picks for Ultimate Growth." So stop settling for index-hugging gains... and click HERE for instant access to a whole new game plan of stock picks to help power your portfolio.
The article Why Youku Tudou Shares Got a Black Eye Today originally appeared on Fool.com.Fool contributor Alex Planes 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.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.