Youdao: Operating Profitability Inflection Point Is In Sight

Aug. 24, 2024 5:39 AM ETYoudao, Inc. (DAO) StockDAO
The Value Pendulum
Investing Group Leader
(7min)

Summary

  • DAO's operating loss and net loss narrowed significantly on a YoY basis in Q2 2024.
  • Youdao is well-positioned to record positive operating profit for 2H 2024 and the full-year, considering seasonality effects, the restructuring of non-core operations, and the optimization of marketing costs with AI.
  • The stock is deserving of a higher P/S multiple and a Buy rating, taking into account the prospects of the company hitting an operating profitability inflection point this year.
  • Looking for more investing ideas like this one? Get them exclusively at Asia Value & Moat Stocks. Learn More »

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My Buy investment rating for Youdao, Inc.'s (NYSE:DAO) shares stays unchanged. DAO's Q2 2024 bottom line beat and results briefing commentary indicate that the company is coming closer to reaching an operating profitability inflection point.

DAO's first quarter

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This article was written by

The Value Pendulum
12.64K Followers

The Value Pendulum is an Asian equity market specialist with over a decade of experience on both the buy and sell sides.

He is the author of the investing group Asia Value & Moat Stocks, providing ideas for value investors seeking investment opportunities listed in Asia, with a particular focus on the Hong Kong market. He hunts for deep value balance sheet bargains and wide moat stocks and provides a range of watch lists with monthly updates within his investing group.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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