Why Sohu.com Ltd - ADR Fell Monday

The company's guidance was well below consensus estimates. Here's what investors should know.

Daniel Sparks
Daniel Sparks
Jul 30, 2018 at 2:12PM
Technology and Telecom

What happened

Shares of Sohu.com (NASDAQ:SOHU) fell as much as 22.6% on Monday, following the Chinese online advertising, search, and gaming company's second-quarter financial results. At the time of this writing, shares are down 13.7%.

Though Sohu's non-GAAP loss per share for its second quarter was narrower than expected, the company reported revenue and guidance below consensus estimates for the metrics. 

A sketch on a chalkboard of a stock price falling

Image source: Getty Images.

So what

On a non-GAAP basis, Sohu lost $1.27 per share, narrower than a consensus estimate for a loss per share of $1.49. This was on revenue of $486 million, up 5% year over year. On average, analysts were expecting revenue of $502 million for the period.

In Sohu's second-quarter press release, Sohu CEO Charles Zhang acknowledged the company's results were "mixed."

"While quarterly revenue was slightly soft given the continued headwinds against our brand advertising business, the bottom line performance was better than expected as we aggressively slashed content costs," said Zhang.


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Now what

Sohu's outlook was particularly somber when compared to what analysts were expecting. For the third quarter, management guided for a loss between $1.40 and $1.65 on revenue of $445 million to $470 million. On average, analysts are expecting a third-quarter non-GAAP loss per share of $1.23 and revenue of $558 million.