Youku Still Up for Grabs

 | Aug 22, 2013 | 4:00 PM EDT
  • Comment
  • Print Print
  • Print
Stock quotes in this article:




Online video provider Youku (YOKU) is a gem in the Chinese Internet space. But if investors are lucky, it will get taken out.

It delivered disappointing earnings a couple of weeks ago, erasing most of a run-up to $26 from $19. In the last couple of trading sessions, however, it's bounced back and is around $23 this afternoon.

Meanwhile, giants Baidu (BIDU) and Tencent are looking to mergers and acquisitions to grow their businesses. And once Alibaba Group goes public, probably this fall, it will have plenty of money to throw at companies.

Youku could participate in the rising tide of an Alibaba offering. Many small-cap Chinese Internet companies are available for purchase, like Jaiyuan (DATE), BitAuto (BITA) and Taomee (TAOM), but it's not clear that these smaller names will move the needle for big companies like Alibaba or Tencent the way Youku could. Baidu already has a strong online video presence, and Alibaba recently made a big investment in the space through acquisition.

There have been a number of acquisitions of unprofitable players in the online video space. But Youku has been a buyer, taking out its former competitor Tudou last year.

Youku has great management, its online video is popular and it's a great outlet for selling ads. It's available, and I believe it will be acquired in the next year. So it's a good name to own between now and its next earnings -- which might disappoint again.

In the meantime, people will bid it up, especially if Alibaba goes public in the next couple of months. And that will shine a spotlight on all Chinese Internet names.

Columnist Conversations

Foot Locker's (FL) less than expected quarterly earnings set off a round of selling the entire athletic appare...
View Chart »  View in New Window » Gold has met the first upside target off the last setup zon...



News Breaks

Powered by


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.