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# Qihoo 360 Technology Market Cap - What You Need to Know NOW ! ! !

There is a lot of confusion and conflicting numbers being thrown about regarding the market cap of Qihoo 360 Technology (NYSE:QIHU).   The early success of this recent IPO has left many an investor wondering what the company's market cap is.   I have seen articles stating anywhere from \$2.5B to over \$5B.  Clearly, there is a correct number: and that number is, at the ADS closing share price as of Friday 4/1/11 (29.50/ADS share), the market cap is approximately \$1.52B.   The calculation and supporting information for this is presented below.

For reference, below are links to the Qihoo 360 corporate website, and the company's commercial website. A financial tear sheet is found at the home page (under the stock quote information) of the corporate website. The tear sheet lists the current shares outstanding as 51,332,000, and at the 4/1/11 ADS closing price the market cap is listed as \$1.514B. The important thing to understand is the tear sheet is using the ADS "equivalent" number of shares for the "shares outstanding" count - which is appropriate, as the sheet is using the ADS share price.

- Corp./IR website:
http://corp.360.cn/

- Financial Tear Sheet:
http://ir.360.cn/Tearsheet.ashx?c=243376

- Commercial Website:
http://www.360.cn/

You can use Google Translate to view the commercial site.

I can not fully explain the wide variance I have seen on number of shares outstanding.  It may simply be there is some confusion on the total common shares outstanding due to misunderstanding of the ratio of ADS to common, and the ratio of other shares (preferred/private-equity) converted to common.

As the ADS ratio is 2:3 (2 shares ADS = 3 shares common), to get the "equivalent" ADS shares used to calculate the market cap (using the ADS share price), the company's SEC filing stated outstanding "common" share total of 78,314.016 is multiplied by 2/3.   Which yields approximately 52.2 M shares ADS "equivalent" outstanding.   This closely agrees with the tear sheet number, and yields a market cap, as of 4/1/11, of approximately \$1.52B.

Obviously, this is very important information. The various financial websites will soon have the market cap data posted (currently listed as NA) and will clarify this very important data point.

Having established the current market cap of QIHU, one can more easily determine if they believe the company is fairly valued (or not), and what its future value, based on growth expectations, may be.   This is where the real fun begins, as the revenue and earnings growth potential for QIHU is huge providing the company can continue to grow and translate its large user base into "ad-based" and "platform-sharing" revenue and earnings.

Note:  I hold a long position in QIHU; recommend the equity as a "Buy", with a conservative end of year target of \$52.50/ADS (based on revenue growth of 80% year-over-year, and a valuation of 27 x 2011 estimated revenue of \$100.3M).

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: QIHU is a recent IPO - I have a long position in QIHU.