Changyou.com Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Chinese online game developer Changyou.com (Nasdaq: CYOU  ) have plunged today by as much as 14% after the company reported fourth-quarter earnings.

So what: Even though the results topped estimates, guidance has spooked investors. Revenue added up to $137.7 million while earnings per share was $1.33. Compare those to the market's expectations of $124.1 million in sales and a $1.09 per share profit.

Now what: Although first-quarter revenue is forecast to be better than expected at $130 million to $134 million, the bottom-line guidance left a little to be desired. Next quarter's profit is forecast to be below the consensus estimate of $1.13 per share, with the company is expecting anywhere from $1.08 to $1.12. Majority owner Sohu.com (Nasdaq: SOHU  ) also reported today, and both companies' shares are getting slammed today after one-time impairment charges weighed on results.

Interested in more info on Changyou.com? Add it to your watchlist by clicking here.

Fool contributor Evan Niu holds no position in any company mentioned. Click here to see his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Sohu.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On February 06, 2012, at 7:46 PM, educandi wrote:

    I searched this Motley Fool article for what I needed to know and found NOTHING! Shares plunge due to guidance! Stock loses 14% when guidance looks to be something like a 2%decrease in earnings and sales. Year end earnings were 4.81 and the stock sells for 25.26, less than 6 times earnings. SOHU, the parent company sell for 12 times earnings. Either one is greatly undervalued or the other is greatly overvalued. Which is it?

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