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The9 Limited: The Stock That Ignores News?

Amy Weingarden

Shares of Shanghai-based online game provider, The9 Limited (ADR) (NASDAQ: NCTY), are set to close 2015 at nearly double the price in which the stock started the year. On a year-to-date basis, the stock is up about 94 percent.

A large portion of this move, notably, came during just the last three months of the year. Shares traded in a quiet range between $0.90 and $2 from January to September, only recently breaking over $1 on October 15 to push to a 52-week high at $4.49 by November 27.

The stock traded recently at $3.04, down 10 percent on the day.

While news related to the company has been hitting news wires recently, the price action does not seem correlated to the news items. Below is a quick run-down of recent disclosures which should have impacted shares:

  • November 25 - Qihoo 360 (NASDAQ: QIHU) and The9 announced a joint venture related to exclusive licensing for publishing of "Cross Fire 2" in China. By the time this news officially hit market players, shares had been up some 75 percent during the preceding month.
  • December 10 - TheStreetSweeper, a known short-seller research firm, issued a new investigative report on The9. Shares did not immediately react.
  • December 21 - 13D and 13G filings from Ark Pacific Investment and Quality Event showed 29.4 percent and 13.2 percent stakes, respectively, in the company.
  • December 24 - 13D filing from Jun Zhu showed a 37 percent stake in The9. Since the latest 13D and 13G filings, shares have drifted lower, now near the $3 level.

Close peers in the Chinese online gaming space have not seen the same run up.

Shares of NetEase Inc (ADR) (NASDAQ: NTES), although now underperforming The9 shares by only 10 percent year-to-date, did not have the same drastic spike The9 shares saw in November. Changyou.Com Ltd (ADR) (NASDAQ: CYOU) shares are down about 8 percent on a year-to-date basis.

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