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TheStreet Open House

You on Demand (YOD) Surges to One-Year High, Then Plunges on High Volume (Update)

NEW YORK (TheStreet) -- You on Demand  (YOD) continued its surge on Tuesday to a one-year high of $7.35 with much higher volume than normal, but the stock plunged in the late afternoon to close at $5.07, a 9.79% or 55-cent decrease from its previous close of $5.62.

The stock had a volume of 20,367,714, more than 58 times its average of 349,553. The stock had a low of $4.87 for the day and has a one-year low of $1.12.

On Friday, a SeekingAlpha article called You on Demand the "Netflix of China." The site posited that You On Demand's exclusive pay-per-view and video-on-demand licenses in China could lead to an increase in its top line by signing deals for distribution rights with major U.S. studios.

Last week, C-Media completed its $19 million investment in You on Demand to bring its total investment in the company up to $25 million. C-Media now also holds three of YOU's seven board seats. Two board members, Michael Jackson, the former chairman of Universal Television, USA Entertainment, and CEO of UK's Channel Four, and Michael Birkin, the former CEO of Omnicom Asia, resigned to allow the representatives from the Beijing-based company to join YOU's board.

"We are excited that C-Media has elected to significantly expand their strategic investment in YOU On Demand and fully fund the company for the foreseeable future," said YOU on Demand Chairman Shane McMahon in a statement.

Must ReadYou On Demand (YOD) Surges on Heavy Volume

TheStreet Ratings team rates YOU ON DEMAND HOLDINGS INC as a "sell" with a ratings score of D-. TheStreet Ratings Team has this to say about its recommendation:

"We rate YOU ON DEMAND HOLDINGS INC (YOD) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Net operating cash flow has declined marginally to -$2.77 million or 1.20% when compared to the same quarter last year. Despite a decrease in cash flow YOU ON DEMAND HOLDINGS INC is still fairing well by exceeding its industry average cash flow growth rate of -11.38%.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Media industry and the overall market, YOU ON DEMAND HOLDINGS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The current debt-to-equity ratio, 0.32, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that YOD's debt-to-equity ratio is low, the quick ratio, which is currently 0.65, displays a potential problem in covering short-term cash needs.
  • Investors have driven up the company's shares by 109.83% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the future course of this stock, we feel that the risks involved in investing in YOD do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • YOU ON DEMAND HOLDINGS INC has improved earnings per share by 21.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, YOU ON DEMAND HOLDINGS INC continued to lose money by earning -$1.24 versus -$1.50 in the prior year. This year, the market expects an improvement in earnings (-$0.72 versus -$1.24).
  • You can view the full analysis from the report here: YOD Ratings Report

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