This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

China Internet Stock Picks for 2012

Stocks in this article: SOHU BIDU RENN SINA YOKU QIHU

By comparison, RENN has cash of $1.2 billion and a market cap of $1.4 billion. Effectively, money-losing RENN is valued at a tiny premium to its cash, while YOKU (which loses more money than RENN) is valued at four times cash. RENN currently trades below $4 but previously traded at $24 (a $9.4 billion market cap!) showing just how overvalued a stock can get, and just how far it can fall when investors tire of holding a "story stock" which continues to lose money.

In short, YOKU could have quite a long ways to fall. If there is upside in YOKU, it will only happen when the company announces a surprise swing to profitability and positive cash flow. Given the missed expectations that have become consistent in the past, it is unlikely that we see this in the next 2 quarters. YOKU's clear strategy is to price its competitors out of the market with respect to content and over the long term that may prove to be a successful strategy. But over the short term, I suspect that investors will lose patience with companies that continue to lose money and burn cash at an excessive rate (even when their platform is exceptional such as YOKU's).

Because it is a money-losing, cash-burning Internet company with a $2 billion market cap, YOKU is arguably the best short pick in the China space. QIHU is either tied for first place or a close second.

QIHU is also a $2 billion market cap company, but by contrast one which is just slightly profitable. QIHU makes all of its money by selling ads on its website and through revenue sharing with game developers on its website. As a result, from a financial standpoint, QIHU is directly comparable to ad giants SINA and SOHU. QIHU has reported a market share as high as 90% for its anti-virus software and over 50% for its Internet browser, but it should be kept in mind that these products are given away for free and the only benefit derived from them is the increased traffic they can direct to QIHU's website. In comparison to advertising competitors SINA and SOHU, QIHU is dramatically overvalued, as shown below.

2 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,090.33 +8.45 0.41%
NASDAQ 4,810.3630 +36.8910 0.77%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs