This has been a pretty volatile time to invest in China's leading online-gaming providers. Regulators are cracking down on game content and foreign ownership. Recent IPOs have not gone over too well.
There is also a wider disparity in terms of performance. Changyou.com
As in most quarters, Shanda Interactive
Nope. Shanda's net revenue soared 48% to $202.5 million. Earnings climbed 29% to $0.90 a share, just ahead of Wall Street's $0.88-a-share target. Profitability rose a healthy 49% on a non-GAAP basis.
It certainly could have been worse. Shanda is the same company that decided to take its Shanda Games
The sector's uncertainty has been weighing on the publicly traded players. The stocks currently trade for just 10 to 14 times next year's projected earnings. Regulators have already tripped up NetEase by delaying its release of Activision Blizzard's
Either way, the lesson here is to stick with the winners in an industry that's no longer rewarding all comers. Shanda, for now, is worthy of a victory lap.
Are you worried about the future of online gaming in China? Share your thoughts in the comment box below.
Netease.com, Perfect World, and Shanda Interactive are Motley Fool Rule Breakers recommendations. Activision Blizzard is a Motley Fool Stock Advisor selection. Try any of our Foolish newsletter services free for 30 days.
Longtime Fool contributor Rick Munarriz has been a fan of China's high-margin gaming stocks for a long time. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. He owns no shares in any of the companies in this story. The Fool has a disclosure policy.