Charles Zhang
Long/short equity, value, special situations, contrarian

Changyou's Platform Ambition; Apple's Inevitable Decline

Changyou (NASDAQ:CYOU) reported its Q3 earnings on October 28th and its stock has fallen 23% on concerns related to its margin guidance. Some analysts believed that Changyou's margin is weakening and its business must be bad. They got it wrong - lower margin is to fuel future growth. Changyou finished its five-year plan and chose to utilize its large cash pile to expand further into mobile gaming and platform business. The company planned an incremental $53 million marketing and R&D push to roll out new mobile games and build its platform during the 4th quarter. It's currently trading at 3.2x P/E (ttm, ex-cash). At the current price level, not only the market values its 17173 portal and mobile...

Join Seeking Alpha PRO to read this archived article and 11,574 other archived articles
IDEA GENERATORXExclusive access to 10 PRO ideas every day
INVESTING IDEAS LIBRARYXExclusive access to PRO library of more than 15,000 ideas
SECTOR EXPERT NETWORKXExclusive access to all sector experts for direct consultation
PERFORMANCE TRACKINGXTrack performance of all PRO stock ideas
PROFESSIONAL TOOLSXProfessional Idea Filters to zero-in based on industry, market cap and more
"In just the first month of using PRO, I used it to generate two ideas which were actionable for me. As a result of these two positions, I have earned more than 20 times the annual subscription costs for PRO."Michael Yagemann, Greenbridge Capital
"I am pleasantly surprised with the scope of small and mid-cap coverage PRO offers. You can't find that any where else."Patrick Rice, Mainstay Capital Management
You may cancel at any time for any reason, and receive a prompt refund for membership on months paid and not used (max. 6 months). Details