You On Demand (YOD) Surges on Heavy Volume

NEW YORK (TheStreet) -- You On Demand Holdings (YOD) is surging on Monday, with trading volume far higher than normal.

By late morning, shares have added 26.6% to $4.19, and 3.2 million shares have changed hands, 13 times its three-month average daily trading volume.

The stock added to gains it made over Friday after a SeekingAlpha article pegged it as the "Netflix of China." Since Friday, shares of the video-on-demand service have gained 64.1%.

SeekingAlpha argued You On Demand's exclusive pay-per-view and video-on-demand license in China will allow it to increase its top line by inking distribution rights with major U.S. studios.

Earlier in the month, C-Media completed its $19 million investment in the company, bringing its total investment to $25 million. C-Media now holds three of the seven board seats. 

"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. 

"In addition to providing us with funding to assist our company at this important inflection point in our corporate evolution, we also look forward to continuing to benefit from [C-Media CEO Xuesong] Song's tremendous experience and success doing business in China, as well as C-Media's mobile industry expertise," McMahon continued. 

"With C-Media's ongoing support, we will continue You On Demand's mission to provide consumers with the best and highest quality entertainment experiences across a wide array of user-friendly platforms."

Must Read: C-Media Completes You On Demand (YOD) Investment

TheStreet Ratings team rates YOU ON DEMAND HOLDINGS INC as a Sell with a ratings score of D-. The team has this to say about their 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).

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