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!

Will Facebook Frenzy Fizzle for China Internet Stocks?

Stocks in this article: RENN DANG YOKU

Again, DANG is not Amazon (AMZN), despite the fact that is it is a much used analogy used to hype the stock. is the dominant site in China, followed by, then DANG. Traffic at Taobao is nearly triple that of DANG, and an unfortunate reality in China is that Taobao's willingness to sell pirated goods means that it can attract far more consumers at a cheaper price than DANG. (For reference, I include this link to a pirated CFA study program on Taobao. It is identical in every way but sells for only 10% of the cost charged by Schweiser.)

Both of these larger competitors, Taobao and, have been rumored to be pursuing IPO's as well. So the question for the long term for DANG is how long the company can keep reporting accelerating losses to keep pace in a price war with competitors who sell products at 50% to 90% lower prices. Now that it has doubled to $8.34, DANG is a great short, but it could easily power higher due to Facebook frenzy, so it is one to be cautious with. I am watching day by day.

If there is one analogy which is correct among these stocks, it is that YOKU is the YouTube of China. YOKU's site is fantastic and content is amazing. YOKU is sitting on a large pile of cash and has been using it as a weapon to bid up the price of content, trying to price competitors such as TUDO out of the market. So far it seems to be working, but the added costs are having the predictable negative effect on YOKU's bottom line. Last quarter, the stock saw a 30% run up into earnings and then plunged when it reported an "unexpectedly large loss." I was short after the pop in the stock based on the widespread reports of the content price war that YOKU was leading. It was almost inevitable that the bottom line was going to be affected.

Likewise, the effect of DANG's price war with Taobao and is going to have a very predictable effect on the bottom line. I made this prediction before YOKU earnings came out, and I am now making it again with DANG.

3 of 4

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 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

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