Seeking Alpha

Chinese Internet stocks slide following Sohu results, video censorship

  • Sohu (SOHU -4.8%) missed Q1 estimates and provided light Q2 guidance. Meanwhile, as part of a recent crackdown, the Chinese government has pulled The Big Bang Theory and other popular U.S. shows from sites such as Sohu.com, Youku.com (YOKU -4.4%), Baidu's (BIDU -5%) iQiyi, and Tencent Video (TCEHY -2.8%). Time observes The Big Bang Theory has produced 1.3B video views since launching on Sohu TV in '09.
  • The news is overshadowing a $1.22B investment in Youku by Alibaba (ABABA) and an affiliated P-E firm, and a WSJ report stating Alibaba is forming a mobile search JV with leading mobile browser firm UCWeb (once targeted by Baidu).
  • The deals are the latest in a long line of investments and partnerships struck by Alibaba, Tencent, and Baidu, as each firm tries to build a Web/mobile empire covering over a dozen valuable markets.
  • Is Qihoo (QIHU -0.8%) next in line to make a deal? With a $21.6B market cap, the security app/browser/search provider and Baidu rival is the biggest Chinese Internet company to remain independent of the big-3. Qihoo was reported in January to be talking with Alibaba.
  • Other decliners: NQ -6.5%. VIPS -5.2%. WB -4.2%. WBAI -3%. LONG -4.5%. QUNR -2.4%.
Comments (11)
  • Patent News
    , contributor
    Comments (1312) | Send Message
     
    they were very overpriced to begin with and still pretty overpriced...
    28 Apr, 10:52 AM Reply Like
  • James Sands
    , contributor
    Comments (1902) | Send Message
     
    Agree on most of the names listed above.....I'd say Baidu is an exception.
    28 Apr, 12:04 PM Reply Like
  • Guy in Ithaca
    , contributor
    Comments (315) | Send Message
     
    In the final analysis the Chinese government will only go so far to disrupt their giant, shiny economy. I believe there are about 600 million people in China on the internet of which about 80 percent are mobile. The population of China is over 1.3 billion. Most things which generate profit on the internet have nothing to do with politics or ideology. Alibaba is the leader in making a profit from the sale of those things. Some investors stand to make a considerable profit from these facts. That's where the Alibaba IPO comes in. It's important to separate the noise from the core facts here. Nothing here will "overshadow" Alibaba.
    28 Apr, 11:09 AM Reply Like
  • James Sands
    , contributor
    Comments (1902) | Send Message
     
    More importantly, many of the existing public companies here are going to grow substantially over the long-term.....

     

    It is fair to assume that Chinese companies will most likely trade at discounts to Western-based companies despite faster growth and better fundamentals do to the government risk perception, which is tangible.

     

    There is a growing disconnect between strict government regulations and business development. China and Russia will always be inclined to force regulations, but will also need to grow their economies.

     

    Media will continue to be developed, purchased, and consumed at large scales in China. Long-term events like today offer those willing to expose themselves to these risks buying opportunities.
    28 Apr, 11:42 AM Reply Like
  • VICENTE ZLOSILO
    , contributor
    Comments (2) | Send Message
     
    Agriculture Engineer, ex ceo Apisa Air Cargo, general manager GCM del Peru. 70 years old.
    28 Apr, 11:51 AM Reply Like
  • Guy in Ithaca
    , contributor
    Comments (315) | Send Message
     
    Vicente- welcome to the most professional investment community on the internet.
    28 Apr, 12:00 PM Reply Like
  • may be
    , contributor
    Comments (164) | Send Message
     
    Any ideal what day the IPO. of ALIBABA will be listed?
    28 Apr, 01:00 PM Reply Like
  • A Fraser
    , contributor
    Comments (149) | Send Message
     
    Overreaction to news on a single company. The Chinese tech companies that make money now are oversold. They are not down bc of fundamentals but bc the market is taking money off the table. The companies are mostly all good on fundamentals AND growth prospects. What's not to like?

     

    The country risk is minimal and short lived to the larger companies. No politician wants to be on the wrong side of billions of dollars in Chinese market cap. That said I would say this news should be more negative to any foreign companies trying to break into the Chinese market, and therefore a long term positive to national companies. I like bidu qihu and yy, and yhoo (for alibaba until it goes public).
    28 Apr, 02:39 PM Reply Like
  • Regular Joe Investor
    , contributor
    Comments (126) | Send Message
     
    My Take on China.

     

    There is an oversupply of housing in China. Everyone knows it. Nowhere else in the world has there been so much construction for residential housing, commercial, and office space than there has been in China the last 10 years. This has led to a huge surplus in housing. Nowhere else in the world are there entire Ghost Cities as there is found in China.

     

    Demand is slowing because the people who can afford to buy houses in China have already bought one. Otherwise, the people who have not yet bought a house, can not afford to buy one.

     

    The price of housing is so high that the average Chinese person is unable to afford to buy a house. So, who is left to buy the homes? The rich, the investors, Chinese companies investing it’s money, REIT’s, and the government. But the funny thing is that the average individual home owner, can no longer afford to buy a house.

     

    Due to the high cost of the housing and the lower demand for it…something has got to give and eventually the prices of housing must start to come down. And when this does, the developers and property owners will panic…causing a mass selling spree…which will ultimately cause a housing market crash. And a housing market crash, I believe, will wreck the Chinese Economy.

     

    The rich, who are able to buy houses, are now looking to invest their money over seas. Overseas investments have increased significantly from last year.

     

    Investing in empty homes is like burying money into the ground. And anyone who has ever owned a House know that houses Deteriorate and will need maintenance over time. This is something the Chinese do not appear to be thinking about at this time.

     

    There is less and less land available to sell and this is where cities get upwards of 60% of their revenues. So the Cities will need to at some point, come up with another source of Revenue…which will eventually lead to Property Taxes. And an empty home with Property Taxes is a money losing proposition. And if the Cities do nothing…then, in the end…they’ll run out of money…

     

    There will be less and less land to build on over time. And the land to build will continue to get more expensive over time.

     

    More expensive land, coupled with a discounted property Market is signaling the end for many Real Estate Developers in China. And ss housing slows in China, it will affect the housing materials industry as well.

     

    It is also getting more expensive for Real Estate Developers to get loans in order to buy land develop properties.

     

    It is getting more expensive for Consumers to get loans to buy houses.

     

    If the Real Estate Developers cannot sell the finished Residential Houses and Commercial Buildings, then the Banks will be left holding the bag for the outstand loans. And the houses and buildings are really not worth that much...empty and unwanted.

     

    And as for the Shadow Banks…I believe their money comes from the Chinese People…who’ll be left with loans…which will not be repaid once the real estate market crashes.

     

    China’s population is not increasing. China has had a one child policy for the last 35 years.

     

    I have read that Land in China is leased to Developers for 70 years. “Leased” ! Check it out. And wording on the lease contracts are not clearly spelled out as to what happens when the 70 year lease term expires. Wow!

     

    Moody’s changed it’s Chinese Property Industry Outlook from Stable to Negative on 5-20-14.

     

    China’s Richest man has sold all of his property in China…only to invest in Europe. Li Ka-Shing has a reputation of seeing things ahead of everyone else. He is an incredible real estate investor. If Li Ka-Shing is selling, why aren’t you?

     

    I invest a little money on the side. I’m a small timer. And these are just my observations and opinions. Not trying to hurt or offend anyone. Thank you.

     

    I firmly believe a real estate Crash in China will happen at some point. I don’t know when, but from history…we all know what happens to bubbles…

     

    Full Disclosure: I have Put options on China ETF’s.
    23 May, 12:44 AM Reply Like
  • James Sands
    , contributor
    Comments (1902) | Send Message
     
    There are quite a few situations where companies lease properties and do not have confirmation that the entity they are leasing from is the actual owner, this is disclosed in a few risk areas in filings I've come across. The risk is that they may be forced to relocate while operating their business.

     

    I still think owning tech/e-commerce such as Baidu, Tencent, JD, or Alibaba will be some of the strongest performers over the years irrespective of economic cycles.
    23 May, 12:53 AM Reply Like
  • Regular Joe Investor
    , contributor
    Comments (126) | Send Message
     
    A Typical Apartment in Shanghai Costs More Than 45 Times The Average Residents.

     

    So what started out as a comment on Seeking Alpha is turning into an official seeking Alpha Instablog article. I’m going to discuss my observations and opinions regarding the housing bubble in China, and what I expect to happen sometime in the near future. I am not a financial professional. I invest a little money on the side. I’m a small timer. Just an average Joe. And these are just my observations and opinions. I am certainly not trying to hurt or offend anyone. Thank you. My take below.

     

    http://bit.ly/1omrNsC
    26 May, 02:06 PM Reply Like
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