Since our first report on 8/8/13, Phoenix New Media ("FENG", or "the Company") reported two consecutive quarters of strong earnings. The market's response to each earnings release was surprisingly divergent. After crushing 2Q 2013 EPS estimates, FENG's share price rose 7.42% to $9.07 on its way to a 52-week high of $13.38. And yet, after similarly exceeding 3Q 2013 EPS estimates, FENG's share price fell 11.23%, although it has rebounded a bit since then. We believe the market's response to Q3 earnings shows how poorly the majority of investors understand FENG's strategy and what really matters to the long thesis.
Amid the post-Q3 sell-off, the market missed the most important takeaways from FENG's results:
- Continued strong market
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