We will see. It seems to be the theme for all Chinese companies; spend much more in 2014 to gain market share. Baidu confirmed they will be making a huge marketing push in 2014 for IQiyi and other businesses they have. As you can see the market didn't like the compressed margins, as a result Baidu only went up 3.5% when it was looking like it was going to go up 15-20% after-hours yesterday.
I am thinking Youku has to also spend more to ensure they don't lose market share as Baidu has the power and brand to take a big bite out of their member base.
As in Baidu's case, the conference call can completely change the game.
Let's see what they have to say about margin for 2014. All Chinese companies are guiding down on margin for 2014 because they have to spend big to be able to compete. See SINA, BIDU, Etc. 100k shares traded means nothing on what direction this is going. BIDU was up over $15 after hours yesterday and was red this morning.
For the first quarter of 2014, the Company expects to continue the net revenue growth year-on-year at a rate of approximately 25-30%. This forecast reflects Ctrip's current and preliminary view, which is subject to change.
They are saying their "net" revenue is going to grow 25-30%. I think many of their expenses they are talking about are 1 time expenses that can be added back to revenue as most companies do. For example, spending dollars to get a division up and running is a 1 time expense. Now there will be ongoing expenses but that will be offset by revenue from that division. The startup cost is a 1 time expense.
This is my take on it. When you look at the last 10 minutes of trading activity, very few shares moved the stock from 6% green to 10% red.
these guys have 40% of their market cap in cash and very little debt. I can't believe they are trading at ~$40/share. This was trading at $60 just 4 months ago which is also undervalued compared to peers.