Cheetah Mobile Inc (ADR) (NYSE:CMCM) shares fell 11.29% on Friday to $10.14 even with slightly stronger than expected first-quarter earnings data from the company.
Cheetah Mobile Inc (ADR) (NYSE:CMCM) reported approximately $172.9 million in revenue for the period, reflecting solid year-over-year growth of 63% and a 110.5% pickup in mobile revenue. Growth in adjusted net income surpassed 30% to $15.8 million.
However, the stock gapped down on Thursday and on Friday, as investors focused on downbeat guidance for the year. For the current period, Cheetah Mobile Inc (ADR) (NYSE:CMCM) expects revenue to come in at $151 million to $155 million, reflecting year-over-year growth of just 10-13% instead of analysts’ projections at around 53.2%.
“We have begun 2016 on a solid note with revenues coming in at the high end of our guidance,” admitted Cheetah Mobile CEO Sheng Fu. “But, contrary to our previous expectation of a seasonal rebound, revenues have not grown as anticipated in the early part of the second quarter.”
Fu explained that they are expecting a significant decline in eCPMs from some international third-party ad platform partners, slower-than-expected progress expanding Cheetah Mobile’s direct sales force, and longer-than-expected time to execute its content product strategy.
The stock is currently trading around the middle of its 52-week range of $9.50 to $11.03. A test of the yearly lows could be in the cards given the weaker estimates for the current quarter, with a downside break looming if this performance carries on for the rest of the year.
Cheetah Mobile Inc (ADR) (NYSE:CMCM) is a provider of online marketing services, Internet value-added services and Internet security services and others in China. operates a platform that offers mobile and desktop applications for its users and global content distribution channels for its customers, both of which are powered by its cloud-based data analytics engines. It also offers users a suite of applications to improve mobile and PC Internet system performance and provides real-time protection against known and unknown security threats.
DISCLAIMER: There is a substantial risk of loss with any speculative asset, especially small cap stocks. The opinions expressed are those of the author, and do not constitute recommendations to buy or sell a stock. Do your own research before committing capital.
