Only one of China’s top Internet companies carries a higher share price today than it did one year ago. And that’s due only to the company’s acquisition by one of its competitors. That’s a pretty sorry showing for the world’s most populous country, where growth was supposed to be the name of the game.
For the past 12 months, the biggest loser is SINA Corp. (NASDAQ: SINA), down nearly -63%, followed by Renren Inc. (NYSE: RENN) down -60%. Search engine firm Sohu.com Inc. (NASDAQ: SOHU) is down nearly -56%, E-commerce China Dangdang Inc. (NYSE: DANG) i down -54%, and YouTube clone Youku Inc. (NYSE: YOKU) is down about -52%. China’s search engine leader Baidu Inc. (NASDAQ: BIDU) is down -29%. Even video streaming firm Tudou Holdings Ltd. (NASDAQ: TUDO), which is being acquired by Youku, is down -1% after rising by more than 60% following the announcement of the acquisition.
What’s happening is that growth has stalled as costs have mounted and the growth of the overall Chinese economy has also weakened. More than 550 million Chinese have Internet access, but user growth rates have fallen from more than 50% to around 10%-12%.
Analysts have been expecting a burst of traffic and buying, but it has failed to materialize so far. Youku’s revenues are expected to double year-over-year in the second quarter, but analysts expect a larger EPS loss than a year ago. Tudou, which was not a publicly traded company a year ago, is expected to post an EPS loss double that of the previous quarter.
Among the others, only Baidu and Sohu are expected to beat year-ago earnings even though revenue figures are up, and every one of these companies has a lower bar to clear than they did a year ago.
Every one of these companies is down again today, probably due to the disaster at New Oriental Education & Technology Group (NYSE: EDU), which is down -29% following an analyst’s downgrade on an expected slowdown in discretionary spending. The biggest loser is Tudou, down -8.9%, followed closely by its soon-to-be new owner Youku, down -8.5%. SINA is down -7.8%, Renren is down -5.1%, Dangdang is down -4.8%, Sohu is down -4.1%, and Baidu is off -3.5%.
Sohu and Baidu are scheduled to report earnings next week, with the others following in the first half of August. Expectations are low, but may not be low enough.
Paul Ausick
Take This Retirement Quiz To Get Matched With An Advisor Now (Sponsored)
Are you ready for retirement? Planning for retirement can be overwhelming, that’s why it could be a good idea to speak to a fiduciary financial advisor about your goals today.
Start by taking this retirement quiz right here from SmartAsset that will match you with up to 3 financial advisors that serve your area and beyond in 5 minutes. Smart Asset is now matching over 50,000 people a month.
Click here now to get started.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
