This Day On The Street
Continue to site
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

Midday Report: Chinese Internet Stocks Left Out of U.S. Rally:

NEW YORK (TheStreet) --Biotech mergers and improving home sales heated up U.S. markets Monday. But Chinese Internet stocks were left out in the cold.

Asia was a disaster, but $SPY futures green for now with $VXX showing weakness. $AZN gets a boost on M&A rumor, with $PFE up nicely too.

- Olive Darragh (@Zolio) Apr. 28 at 09:36 AM

The S&P 500, Dow and Nasdaq were all in the green after big pharma kicked off merger Monday with two major offers. Pfizer (PFE) confirmed early this morning that it renewed its $100 billion bid for AstraZeneca late last week. A few hours later, Forest Labs (FRX) announced plans to buy Furiex Pharmaceuticals (FURX) for as much as $1.5 billion. Both offers were a significant premium over Friday's closing price, giving investors reason to believe that biotech valuations are not bubbly, as many argued last month.

Home sales data, released at ten, also gave investors reasons to be bullish. The National Association of Realtors said that contracts to buy pre-owned homes rose 3.4% in March -- the first gain in nine months. The growth topped economists' calls for a 1% rise. Housing data is considered a bellwether for broader economic growth since many Americans' net worth is tied to the value of their homes.

$SPY Lots of bullish news today, other than Russia sanctions. Will be interesting to see if market holds onto gains. it better.

- 6killer (@6killer) Apr. 28 at 10:37 AM

But the StockTwits' heat map wasn't all green. In fact, tech had a glaring red splotch filled with the names of Chinese Internet companies, such as (SOHU), ChangYou (CYOU), Youku (YOKU) and Baidu (BIDU). Disappointing earnings and a report that China had banned streaming of popular U.S. television shows weighed on the sector.

Beijing-based Web portal revealed an unexpected quarterly loss Monday of $79 million, or $2.05 per share, for the first three months of the year. The company attributed the loss to increased expenses to promote and expand its mobile business and games unit. Revenues rose 19% to $365 million in the quarter. Sohu shares fell nearly 7% by 11a.m. Management forecast a loss in the current quarter of between $48 million and $52 million.

China-based game developer ChangYou, $CYOU, also fell after announcing earnings. ChangYou posted a $19.5 million loss and said revenues fell 7% from the prior quarter to $180.8 million.

Baidu, one of the biggest online players in China, was the hardest hit Monday. Shares fell 6% by 11a.m. Monday.

$SOHU price action in early going post #earnings not good - just like all others - caution $BIDU ; not chasing $YOKU Alibaba news

- Anacott Steel (@BPGAG) Apr. 28 at 09:20 AM

Some investors argued that the Chinese Internet sell-off was overdone. They noted that China is not new to censoring online activities.

$BIDU Chinese censoring.... That's a shock... Buy the dip.

- Mark Holder (@StoneFoxCapital) Apr. 28 at 11:07 AM

And there was some good news in the sector. Alibaba, the Chinese e-commerce giant that will go public later this year in U.S. markets to the tune of $160+ billion, and a private equity firm founded by Alibaba chairman Jack Ma announced they would acquire an 18.5% stake in Youku for $1.22 billion. The price is a significant premium to Friday's close.

$YOKU Alibaba and Yunfeng are paying $30.50 per American Depositary Receipt, or a 26.3% premium to Youku Tudou's close on Friday of $24.14.

- E (@DrunkenMonkey) Apr. 28 at 10:43 AM

But, even Youku investors aggressively sold the news. The stock fell nearly 7% by 11:15 a.m.

$YOKU I'm no genius but isn't this alibaba deal good news? If someone gave me a billion dollars for my company, prices would be going up

- Tony L (@TonyCL) Apr. 28 at 10:58 AM

At the time of publication the author had no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.64 -0.11%
FB $118.57 0.84%
GOOG $698.21 0.75%
TSLA $241.80 0.43%
YHOO $36.53 -0.19%


Chart of I:DJI
DOW 17,891.16 +117.52 0.66%
S&P 500 2,081.43 +16.13 0.78%
NASDAQ 4,817.5940 +42.2360 0.88%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs