Sohu.com (SOHU Stock Chart) investors face a gloomy future after the stock of the Chinese company dropped to a new low in 16 years after it reported disappointing financial results last week. This is the first time since the spring of 2003 that the stock has sunk that low to trade in single digits.
Sohu reports $474.8 million in revenue in Q2
In the just-announced Q2 2019 financial results the company reported revenue of around $474.8 million in the quarter which is a 2% decline from what was reported a year ago but it is a 10% sequential improvement. This is the fourth consecutive quarter that Sohu has posted a decline in year-over-year top-line although the pace has moderated with each passing quarter.
Things were not good equally for the subsidiaries that it spun sometimes as they also experienced a drop in their stock. Changyou.com (CYOU Stock Chart) and Sogou (SOGO Stock Chart) which represent Sohu’s gaming and search operations respectively equally tumbled last week hitting new lows despite the segments reporting an increase in revenue.
Q2 revenue within company projections
The company’s quarter did not appear to be disappointing since the reported revenue of $474.8 million was within the company’s projection of revenue between $469 and $494 despite falling short of Wall Street estimates. The adjusted net loss of $50 million reported was better than the projections of a loss of between $60 million and $70 million in the quarter.
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The future for Sohu seems to be uncertain as it continues to perform unsatisfactorily. For instance, in the past year, the company saw its leading advertising revenue dip by 29% despite its Changyou-driven online gaming and Sogou-led search revenue increasing by 3% and 2% respectively.
For the third quarter, the company has estimated its revenue to be between $445 million and $470 million which is a sequential drop. The company has forecast a 10% to 14% jump in top-line which will help in offsetting the 12% to 21% drop in advertising revenue and 6% to 17% dip in online gaming revenue.
