NEW YORK (TheStreet) -- Shares of Chinese subscription video service YOU on Demand (YOD) soared 33.06% to $3.26 in morning trading Wednesday after Chinese smartphone maker Xiaomi said it would invest $1 billion to acquire television content.
The world's fourth-largest smartphone maker, which began making smart TVs last year, joins other Chinese software titans trying to control video content in the nation. The company said it would expand its Web video content library on its televisions and set-tops.
The announcement provided a significant boost to YOU on Demand, which announced in April its You Cinema movie subscription service would become available on Xiaomi set-tops.
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More than 7.9 million shares had changed hands as of 10:45 a.m., compared to the average volume of 276,312.
Separately, 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 their recommendation:
"We rate YOU ON DEMAND HOLDINGS INC (YOD) a SELL. This is driven by a few notable weaknesses, 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 significantly decreased to -$2.65 million or 190.99% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- 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.
- In its most recent trading session, YOD has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- YOU ON DEMAND HOLDINGS INC reported significant earnings per share improvement 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 two years. 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 -$0.89 versus -$1.19 in the prior year. This year, the market expects an improvement in earnings (-$0.66 versus -$0.89).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Media industry. The net income increased by 75.8% when compared to the same quarter one year prior, rising from -$3.28 million to -$0.79 million.
- You can view the full analysis from the report here: YOD Ratings Report