Why Changyou.com (CYOU) Is Down Today

NEW YORK (TheStreet) -- Changyou.com  (CYOU) was falling 11.72% to $26.44 on Monday after the Chinese online game developer and operator issued guidance for the first quarter below analysts' expectations.

Changyou.com said it expects a loss of 30 cents to 42 cents a share in the first quarter; analysts surveyed by Capital IQ expect earnings per share of $1.04. The company also said it expects revenue of $174 million to $180 million, compared to the consensus estimate of $199.69 million.

Changyou.com said it expects revenue to decrease, while it plans to increase spending on marketing of software applications for PCs and mobile devices in China and abroad, according to a company's statement. Changyou.com also plans to increase its investment in human capital.

For the fourth quarter, Changyou.com reported earnings per share of 82 cents, better than the consensus estimate of 40 cents. Revenue increased 12.3% year over year to $194.9 million, compared to the consensus estimate of $195.66 million.

Online game revenue increased 6% quarter over quarter and 9% year over year to reach a record $172 million, while online advertising revenue increased 3% quarter over quarter and 35% year over year to reach a record $16.9 million.

The company also announced that Chief Financial Officer Alex Ho resigned to start his own business.

TheStreet Ratings team rates CHANGYOU.COM LTD as a "buy" with a ratings score of B-. TheStreet Ratings Team has this to say about its recommendation:

"We rate CHANGYOU.COM LTD (CYOU) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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