Youku Tudou: How A Positive View Turns Sour
Youku: Great Prospects But Valuations Are Overcooked
David Ristau • 12 Comments
David Ristau • 12 Comments
Youku: Great Prospects But Valuations Are Overcooked
David Ristau • 12 Comments
David Ristau • 12 Comments
Apr. 17, 2015, 5:36 PM
Apr. 16, 2015, 12:32 PM
- Shares of Youku Tudou (YOKU +2%) have given back some gains after rising as much as 6.7% this morning.
- One reason for the move could be some clarity on Netflix's China expansion plans. CEO Reed Hastings says Netflix will stick to its core and pursue a subscription video streaming service, rather than provide free entertainment supported by ads (as Chinese consumers are accustomed to).
- "That may confine us to being only part of the market the first couple years, but that's what we would do," says Hastings. The company still needs permission to operate in one of the world's largest video markets.
- Youku Tudou is China's biggest online video company, and due to different (or unenforced) copyright laws, Youku has carried copyrighted material without license. Years ago, Tudou had pioneered advertising systems for video sites at heavy scale.
Apr. 14, 2015, 3:08 PM
- Very few tech companies are posting major losses, and a larger number are posting big gains. The Nasdaq is down 0.3%.
- Notable gainers include several Chinese names: Online auto plays Bitauto (BITA +7.4%) and Autohome (ATHM +3.9%), online video platform Youku (YOKU +8.2%), and mobile game publisher Sky-mobi (MOBI +10.1%).
- Others include home automation hardware/software provider Control4 (CTRL +3.9%), oil/gas seismic hardware provider Geospace (GEOS +5.1%), and Indian site owner Rediff (REDF +12.6%).
- Youku, which has been on a roller-coaster ride, is near its highest levels seen the company posted mixed Q4 results and disclosed an SEC inquiry on March 19. Beaten-down Geospace could be benefiting from a fresh rally in oil prices; WTI crude is at $53.27/barrel.
- Previously covered: Lending Club, Alcatel-Lucent, 58.com, InvenSense, TowerJazz, Tangoe, optical networking firms
- Notable decliners: Skyworks/Qorvo, Nokia, Sanmina, Web.com
Apr. 10, 2015, 3:05 PM
- Today's notable tech gainers include IP licensing firm VirnetX (VHC +6%), custom parts maker Proto Labs (PRLB +4.6%), printing plate/commercial film maker Eastman Kodak (KODK +3.9%), cloud HR software vendor Paylocity (PCTY +3.7%), cloud telecom expense software vendor Tangoe (TNGO +4.2%), and cloud tech support software vendor Support.com (SPRT +6.7%). The Nasdaq is up 0.4%.
- Only a few tech companies are posting major declines. The group includes Chinese online video platform Youku (YOKU -5.7%) and mainframe/high-end server maker Unisys (UIS -3.4%).
- Following a rough 2014, VirnetX is up 34% in 2015; 15.9M shares were shorted as of March 13. Proto Labs has broken out of the narrow range shares have traded in since mid-February. Support.com's gains come a day after the company disclosed a new contract with Comcast. Paylocity is erasing the losses seen yesterday following a BofA downgrade. Kodak is up 13% since posting Q4 results on March 16.
- Youku, quite volatile lately, is giving back a chunk of Wednesday's big gains. Unisys' decline comes ahead of its April 23 Q1 report. On Wednesday, the company announced it's supplying high-end servers and cybersecurity software to NASA through the agency's SEWP V contract (covers multiple suppliers, worth up to $20B over 10 years).
- Previously covered: 3D Systems, Alcatel-Lucent, Nokia, LinkedIn, GoDaddy, FireEye, Turtle Beach, Mavenir/Mitel, Gigamon, Synacor
Apr. 8, 2015, 10:58 AM
- Following a big overnight rally in Hong Kong (followed a 3-day holiday during which Shanghai rallied), beaten-down Chinese Internet and mobile stocks have soared in U.S. trading.
- The biggest gainers include many names that are far below their 2014 highs: The group includes Qihoo (QIHU +10.5%), YY (YY +14.9%), Taomee (TAOM +14.3%), Sina (SINA +8.7%), and Weibo (WB +12.1%). Mobile game publishers Sky-mobi (MOBI +12.6%), China Mobile Games (CMGE +8%), and iDreamSky (DSKY +13.4%) are also sharply higher, as are online real estate plays SouFun (SFUN +13.1%), E-House (EJ +6.1%), and Leju (LEJU +9.8%).
- Giants Alibaba (BABA +3.4%) and Baidu (BIDU +4.1%) aren't being left out. Neither are Youku (YOKU +7.5%), 21Vianet (VNET +7.4%), Momo (MOMO +6.8%), Sohu (SOHU +7.7%), Changyou (CYOU +4.5%), Dangdang (DANG +7.3%), Vipshop (VIPS +4.8%), JD.com (JD +3.9%), Jumei (JMEI +6.6%), Sungy Mobile (GOMO +5.8%), China Techfaith (CNTF +7.1%), and KongZhong (KZ +5.5%).
- Alibaba has proposed an asset injection into its money-losing Alibaba Pictures (+36% in Hong Kong) film arm. Sky-mobi has seen Rosenblatt (Buy) hike its target to $11, while noting many Chinese mobile game developers have been bought out; it thinks Sky-mobi's investments in developers could be worth $140M. NetEase has been upgraded by CICC Research.
- Over in Hong Kong, software/cloud services provider Kingsoft (OTCPK:KSFTF) rose 24.2% to HKD$29.50. Messaging/gaming giant Tencent (OTCPK:TCEHY) rose 3.3% to HKD$154.80.
- ETFs: KWEB, CQQQ, QQQC
Apr. 2, 2015, 3:20 PM
- The the Nasdaq is up only fractionally ahead of the long weekend, the ranks of major tech gainers have easily outnumbered the ranks of major decliners today.
- Today's notable gainers include Chinese online video site Youku (YOKU +4.5%), IP licensing firm VirnetX (VHC +6.7%), mobile payment-processing/telemetry services firm USA Technologies (USAT +5.8%), VoIP service provider magicJack (CALL +5%), LED/chip equipment firm Aixtron (AIXG +4.9%), Chinese jobs site 51job (JOBS +4.9%), grocery coupon site Coupons.com (COUP +4.5%), telecom services/analytics firm Neustar (NSR +3.2%), and LED/chip equipment vendors Veeco (VECO +2.7%) and Aixtron (AIXG +4.9%).
- Youku is bouncing after having sold off to new 52-week lows in the wake of its Q4 numbers and an SEC inquiry disclosure. magicJack is recovering some of the big March losses seen after the company posted mixed Q4 results. Neustar is now up 19% since confirming a major contract loss and announcing a $150M buyback a week ago.
- Previously covered: 500.com, AudioCodes, Renren, Expedia, Hutchison, ReneSola, Cheetah Mobile, Sungy Mobile, Yandex, Digital Ally
- Notable decliners: Motorola Solutions, NeoPhotonics, TrueCar, Carbonite, Elephant Talk
Mar. 30, 2015, 3:13 PM
- Today's notable tech gainers include industrial laser maker IPG Photonics (IPGP +4.3%), cloud classroom software provider 2U (TWOU +5.8%), California solar installer Solar3D (SLTD +10.3%), Korean analog/mixed-signal chipmaker MagnaChip (MX +6.8%), privileged account security software vendor CyberArk (CYBR +5.3%), haptic tech provider Immersion (IMMR +4.6%), and solar power optimizer maker/recent IPO SolarEdge (SEDG +4.8%). The Nasdaq is up 1.1%.
- There are relatively few major decliners. The group includes Chinese online video platform Youku (YOKU -4.5%), Chinese solar cell/module maker Yingli (YGE -5.6%), authentication hardware/software provider Vasco (VDSI -3%), and IP licensing firm Marathon Patent Group (MARA -8.8%).
- Solar3D is now up 97% from a March 18 close of $2.57. SolarEdge is up 23% from last week's $18 IPO price. Immersion might be getting a lift from a Barclays report stating Analog Devices will be supplying converter ICs to help enable haptics support on future iPhones/iPads.
- Youku has fallen to fresh 52-week lows, and is now down 18% since posting Q4 results and disclosing an SEC inquiry on March 19. Marathon is down 11% since reporting last Thursday.
- Previously covered: BlackBerry, Altera, Ambarella, OTI, Angie's List, You On Demand, 500.com, Chinese online real estate
Mar. 27, 2015, 3:12 PM
- Today's notable tech gainers include next-gen firewall leader Palo Alto Networks (PANW +3.5%), touchscreen tech developer UniPixel (UNXL +5.9%), solar microinverter leader Enphase (ENPH +5.8%), optical transport/switching hardware vendor Infinera (INFN +3.8%), telecom service/analytics provider Neustar (NSR +4.4%), and Chinese online classifieds leader 58.com (WUBA +4%). The Nasdaq is up 0.3%
- There are relatively few major decliners today. The group includes Infinera rival Ciena (CIEN -4.5%), Chinese sports lottery site 500.com (WBAI -5.3%), and Chinese online video leader Youku (YOKU -3.4%).
- Palo Alto is adding to Thursday gains seen amid a broader cybersecurity stock rally. Likewise, Enphase gained on Thursday following rival SolarEdge's IPO, Neustar gained after announcing a $150M buyback, and Infinera gained following a bullish MKM note.
- Ciena is reversing the Tuesday gains seen after Stifel reported the company's share of a major Verizon 100G metro contract (has been officially announced) could be larger than expected. 500.com is giving back major Thursday gains; yesterday morning, SA Instablog author/former i-banker MNS Global reported hearing Chinese authorities are thinking of indefinitely extending recently-placed bans on online sports lottery sales, after uncovering corruption.
- Previously covered: EMC, HP, Voxeljet, Skyworks, SuperCom, Stratasys, Qunar, Pandora, SanDisk
Mar. 20, 2015, 6:11 PM
- Down only modestly in AH trading yesterday after posting mixed Q4 results, offering above-consensus Q1 sales guidance, and disclosing SEC inquiries, Youku (NYSE:YOKU) gradually sold off to new 52-week lows today.
- Deutsche's Vivian Hao downgraded to Sell, and cut her target to $10.90 from $18.60. "We believe Youku is facing increasing pressure from the content arms race and market share challenges following a year of 'conservative progression.'"
- Hao notes Youku, which already saw content spend rise to 47% of revenue in Q4 from 38% a year earlier, plans to spend aggressively in 2015 to halt share losses to Baidu (iQiyi) and Tencent - research firm EnfoDesk estimates Youku's Chinese online video share has fallen to 22% from 25% in early 2014.
- Brean's Fawne Jiang (Buy) remains bullish, but has cut her target by $4 to $20. "We are positive on the growth momentum of the company as YOKU continues to transform its business model ... The recent partnership with Alibaba could help the company to expand its user base, thereby improving content production and exploring new revenue streams." However, she doesn't see competitive and margin pressures abating near-term.
- Nearly half of Youku's market cap ($2.9B) is now covered by its cash balance ($1.4B). After backing out the cash, shares trade for 1.7x 2015E sales; the 2015 revenue growth consensus is at 37.5%.
Mar. 20, 2015, 12:45 PM
Mar. 20, 2015, 9:23 AM
Mar. 19, 2015, 7:01 PM
- On top of beating Q4 revenue estimates (while missing EPS estimates), Youku (NYSE:YOKU) is guiding for Q1 revenue of RMB1.01B-RMB1.03B ($163.2M-$166.4M), above an RMB996.5M consensus. Ad revenue is expected to total RMB870M-RMB890M.
- Youku also discloses it has received "comments and queries" from the SEC staff about its past accounting. Specifically, questions have been asked about revenue recognition for multi-part deals, the accounting of "non-monetary exchanges of licensed content," and the classification of licensed content as long-lived assets. Youku is "evaluating the impact to its 2014 and historical financial statements that may result from the resolution" of the issues.
- Ad revenue rose 37% Y/Y in Q4 to $177.1M, and consumer revenue (subscription/pay-per-view) 649% to $11.2M.
- Hurting EPS: Content costs (non-GAAP) rose to 47% of revenue from 38% a year ago, and bandwidth costs to 22% from 20%. In addition, operating expenses rose 69% to $76M, outpacing revenue growth of 40%. Sales/marketing spend totaled $50.1M, R&D $16.9M, and G&A $9.1M.
- Youku ended 2014 with $1.4B in cash. Its market cap is currently near $3B.
- YOKU -0.7% AH to $15.05.
- Q4 results, PR
Mar. 19, 2015, 6:23 PM
- Youku.com (NYSE:YOKU): Q4 EPS of -RMB1.18 misses by RMB0.18.
- Revenue of RMB1.26B (+39.8% Y/Y) beats by RMB60M.
Mar. 18, 2015, 5:35 PM
Mar. 16, 2015, 3:19 PM
- Though the Nasdaq is up 1.1%, major tech decliners are roughly on par with major gainers today.
- Notable gainers include telecom equipment vendor Ciena (CIEN +3.9%), data center owner CyrusOne (CONE +4.6%), optical component maker NeoPhotonics (NPTN +6.1%), software outsourcing firm Luxoft (LXFT +7.7%), supply chain software vendor Manhattan Associates (MANH +4.2%), and Chinese game developer NetEase (NTES +3.7%).
- Notable decliners include leading Chinese online video platform Youku (YOKU -4%), 4G router/M2M module maker Novatel (MIFI -5.5%), security hardware/software vendor KEYW Holding (KEYW -5.3%), Chinese online retailer LightInTheBox (LITB -8.7%), Chinese online real estate plays E-House (EJ -4.7%) and Leju (LEJU -5.3%), seismic tech provider Geospace (GEOS -7.5%), and U.S. solar installer Vivint (VSLR -4.3%).
- CyrusOne, Luxoft, and Manhattan Associates are making new 52-week highs. Geospace's decline comes as crude oil falls to fresh 6-year lows. The Chinese decliners are failing to get a boost from pro-stimulus remarks from premier Li Keqiang (they've lifted many other Chinese names).
- Previously covered: Xilinx, Neonode, MoSys, Superconductor Technologies, Himax, Alibaba, Avago, Qorvo, King Digital, iDreamSky, MicroVision
Mar. 5, 2015, 9:24 AM
- Youku Tudou (NYSE:YOKU) sets up a pair of new business units, targeting new drama content and programmatic advertising.
- The Chinese video firm creates Heyi Studios, to make original TV dramas and "innovative Web-native content," and names its chief content officer, Sunny Xiangyang Zhu, to be CEO of the new operation.
- The new Innovative Marketing unit will be led by Yawei Dong, chief marketing officer, and focus on developing programmatic advertising.
- The company also named Edward Su COO. He was most recently CEO of Cina Group for Havas Worldwide.
- The changes mean that Youku Tudou has six units in total -- Youku platform, Tudou platform, Heyi Pictures, Heyi Studios, Innovative Marketing and Cloud Entertainment -- and nine vertically oriented content centers to cover content categories such as games, music, variety shows and others.
Youku Tudou Inc. provides Internet television and online advertising services. Its Internet television platform enables users to search, view and share high-quality video content quickly and easily across multiple devices. The company was founded by Wing Cheung Koo on September 20, 2005 and is... More
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