Youku Tudou (YOKU) Stock Gains on Disney Partnership

NEW YORK (TheStreet) -- Shares of Youku Tudou (YOKU) were gaining 10.9% to $30.65 Tuesday after the Chinese Internet company announced a new partnership with Disney (DIS).

As part of the new partnership, Youku Tudou will be "the exclusive online movie marketing platform in China" for Disney's Marvel movies and TV shows.

The two companies previously created trailers and Youku Original productions for Captain America: The Winter Soldier and Guardians of the Galaxy which were viewed a total of 41 million times with over 15.8 million combined movie VOD views on the Youku Tudou Platform. Trailers and and Youku Original productions for Avengers: Age of Ultron received over 25.7 million cumulative views

"We are committed to expanding our media and entertainment ecosystem by working with strong partners," Youku Tudou Chairman and CEO Victor Koo said. "These partnerships, like the one with Disney, are multifold and give Youku Tudou the opportunity to use its strengths to further its business model and drive future revenue streams through high-quality content, innovative marketing efforts, and merchandising channels."

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 a number of negative factors, 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, disappointing return on equity and weak operating cash flow."

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 -$0.72 versus -$0.58 in the prior year. For the next year, the market is expecting a contraction of 919.9% in earnings (-$7.34 versus -$0.72).
  • 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 194.8% when compared to the same quarter one year ago, falling from -$28.32 million to -$83.47 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness 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.
  • Net operating cash flow has significantly decreased to -$17.36 million or 142.08% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 44.49% is the gross profit margin for YOUKU TUDOU INC which we consider to be strong. Regardless of YOKU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, YOKU's net profit margin of -45.41% significantly underperformed when compared to the industry average.
  • You can view the full analysis from the report here: YOKU Ratings Report

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