NEW YORK (TheStreet) -- Shares of Youku Tuduo (YOKU) were gaining 2.4% to $23.39 Friday after the Chinese Internet TV company announced a new partnership with game media and marketing company Star Game to form the Star Video Alliance.
The Star Video Alliance will create a "new premium standard for gaming video content in China" by creating a new "comprehensive vertically integrated gaming video ecosystem," according to the companies.
The new gaming video and media platform will use Youku Tudou's multi-screen distribution and big data to "empower" game producers, content creators, and users to accelerate the growth of the company's gaming video ecosystem.
"Now, by founding the Star Video Alliance backed by strong partners, we continue to expand our ecosystem by building a complete platform that brings together the entire gaming video community on Youku Tudou," Youku Tudou President of Cloud Entertainment Leo Yang said.
About 8.1 million shares of Youku Tudou were traded 1:30 p.m. Friday, above the company's average trading volume of about 3 million shares a day.
TheStreet Ratings team rates YOUKU TUDOU INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate YOUKU TUDOU INC (YOKU) a SELL. This is driven by multiple 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. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, poor profit margins and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- YOUKU TUDOU INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, YOUKU TUDOU INC reported poor results of -$0.76 versus -$0.58 in the prior year. For the next year, the market is expecting a contraction of 810.9% in earnings (-$6.92 versus -$0.76).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has significantly decreased by 894.3% when compared to the same quarter one year ago, falling from -$5.06 million to -$50.27 million.
- The gross profit margin for YOUKU TUDOU INC is rather low; currently it is at 22.25%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -25.27% is significantly below that of the industry average.
- The share price of YOUKU TUDOU INC has not done very well: it is down 5.41% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, YOUKU TUDOU INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: YOKU Ratings Report