Why Qihoo (QIHU) Stock Is Surging Today

NEW YORK (TheStreet) -- Qihoo 360 Technology  (QIHU) stock is advancing 8.82% to $70.85 on heavy trading volume this afternoon as investors become less concerned that Chinese regulators will block reverse mergers. 

The Beijing-based Internet company's $9.3 billion bid to go private is the biggest among the group of U.S.-traded Chinese companies hoping to move their listings to the mainland, Bloomberg reports. 

The China Securities Regulatory Commission is considering placing restrictions on reverse mergers, including capping valuation multiples for deals involving companies that used to trade overseas as well as setting a quota to limit the number of deals, sources told Bloomberg. 

The potential restrictions are easing investors' concerns that regulators will block these transactions altogether.

"Investors overreacted in the past days," Jun Zhang, head of China research at Rosenblatt Securities, told Bloomberg. "It would be unrealistic for the government to shut down reverse mergers entirely. High quality companies will still be able to go home."

About 6.28 million shares of Qihoo have been traded so far today, well above the company's average trading volume of roughly 1.82 million shares per day. 

Separately, TheStreet Ratings team rates the stock as a "hold" with a ratings score of C+.

Qihoo's strengths such as its robust revenue growth, notable return on equity and solid stock price performance. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet.

You can view the full analysis from the report here: QIHU

TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author. 

More from Markets

Jim Cramer on Tapestry: Accessories Are the Hottest Area of Retail

Jim Cramer on Tapestry: Accessories Are the Hottest Area of Retail

Jim Cramer on Tuesday's Market Gains: Let's Not Get Carried Away

Jim Cramer on Tuesday's Market Gains: Let's Not Get Carried Away

Dow Posts Solid Gains as Turkey Crisis Stabilizes; Home Depot Wavers

Dow Posts Solid Gains as Turkey Crisis Stabilizes; Home Depot Wavers

Jim Cramer on Home Depot, Tapestry, Nordstrom and Square

Jim Cramer on Home Depot, Tapestry, Nordstrom and Square

Jim Cramer Breaks Down the Volatility in Home Depot Shares

Jim Cramer Breaks Down the Volatility in Home Depot Shares