Why Bitauto Hldg Ltd Shares Temporarily Plunged Today

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 Bitauto Hldg Ltd (NYSE: BITA  ) plunged by as much as 12% early Thursday, then recovered to close down just 3% after the Chinese online automotive content and marketing specialist released better-than-expected fourth-quarter results.

So what: Quarterly revenue rose 36.3% year over year, to $79.9 million, which translated to adjusted net income of $0.40 per diluted share. Analysts, on average, were looking for earnings of $0.36 per share on sales of $77.6 million.

However, Bitauto expects current-quarter revenue to fall sequentially in the range of $53.9 million to $55.5 million, with adjusted earnings per share of $0.14 to $0.15. 

Now what: Those expected sequential drops might look bad at first glance, but Bitauto was quick to point out they reflect typical seasonality in the business. Sure enough, the revenue and earnings ranges represent increases over the same year-ago period of 36.1% to 40.3% and 51.8% to 60.7%, respectively.

To be sure, the stock seems to reflect much of that optimism already, trading around 34 times this year's expected earnings and eight times last year's sales. However, that premium may be justified given Bitauto's solid top- and bottom-line growth. If Bitauto can sustain its momentum going forward, there's no reason the stock won't be able to reward patient long-term investors from here.

A guide to buying a car
You don't know it yet, but you probably spent thousands more than you should have on your vehicle. In fact, the auto industry can be such a dangerous place for consumers, that our top auto experts are determined to even the playing field. That's why they created a brand-new free report on The Car Buying Secrets You Must Know. The advice inside could save you thousands of dollars on your next car, so be sure to read this report while it lasts. Your conscience, and your wallet, will thank you. Click here now for instant access.


Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2867548, ~/Articles/ArticleHandler.aspx, 12/20/2014 7:19:03 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement