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Varchild2008 (84.50)

Double Down on Chinese Video Game Sector (CYOU)

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September 30, 2009 – Comments (2)

Are you in my situation?  Don't own Changyou?  Bought into either SNDA or GAME or BOTH and didn't get CYOU in your portfolio?  *oops*  Missed the IPO $19.00 price and think it's over?  *ouch* CYOU is done?  No point getting into it as it is almost twice what it was....right?

Woaw!       I'm here to say...........Time to DOUBLE DOWN on the Chinese Video Game Sector.

Before I explain my analysis of CYOU....    I am going to throw out an interesting *thought* that probably won't happen.... Here's a bit of fiction....

VIVENDI   didn't really "spin-off"  Blizzard.   There was a  (BLIZZ) stock ticker symbol to buy shares.....  I don't think there was...based on my research.. 

All that happened is BLIZZ merged with Activision....  And wammo.... You get 1 big gigantic corporation gaming goodness.

Sooooooooooo......    What if...... (GAME)...........merged........hmm......with.....(CYOU).......and.....all that money earned spinning off GAME....was...in....fact....to do just that?

SNDA got $1.04 billion on top of whatever cash was on their balance sheet before hand.  That's a lot of cash...plenty to merge GAME with CYOU.

Spin-off 1   merges with spin-off 2....     And in that relationship..... SOHU  is interlinked forever with SNDA.

MY GOD!           Kinda makes you want to own SOHU + SNDA  whether you are a CYOU or GAME investor?

So my point?  Fun to speculate....  But....Doubling Down on Chinese Video Gaming is well a SMART proposition in my book.  Now is the time to strike for CYOU..  Here's why!

1)   I calculate an EPS  based on earnings MEETS not BEATS in Q3 and Q4 of $2.77.

2)   At today's price....that's a P/E roughly around 12.75.    !?!??!!?  A P/E of 12.75!!?!?!?!?  For High Flying Changyou????

3)  Whose to say CYOU just meets earnings estimates going forward when they BEAT big both their previous earnings expectations Q1 / Q2 ?   So as exciting a P/E of 12.75 at today's CYOU price is.... There's the prospect the shares are undervaluing earnings for Q3.... That Q3 report is now right around the corner!

Oh....and that brings me to #4

4)  CYOU recently announced in September a video game release... Blade Hero II

Hmm...Has the word BLADE in it..check....coolness.....  The word HERO is next...check...gotta love HEROs.....It is a sequal and thus a start of franchising a previously successful Blade Hero I video game.....WOW.    ???  If this was some sorta unknown debut of a stand-alone game...well ho hum... But this video game is a sequal... 

Knowing NOTHING about the game you can still speculate Changyou doesn't make sequals to games that don't sell.  

But let's stop KNOWING NOTHING about Blade Hero II... Cause we are Motley Fools... We are NERDS GALORE.. We want to check out Blade Hero II!!!

"Blade Hero 2, created as a sequel to the Company's existing game Blade Online,
features a fighting and team-combat system that allows players to experiment
with authentic fighting techniques and weapons from different sects of martial
arts, including the use of hidden weapons, as well as deploy Chinese combat
strategies in battles. Blade Hero 2 also employs the Company's dynamic graphic
technology, which can exhibit detailed fighting moves and other special effects
to enhance the virtual fighting experience."

If your NERD SPIDEY SENSES aren't tingling after reading that... Then you don't stay up to 4:00 in the morning with nothing but a Video Game Joystick in one hand, Bag of Cheetos in the other, and a Pool of Sweat and Drool in your lap, and a video game beaming brightly on your 50 inch LCD Television with 7 DOLBY Surround Sound Speakers.... no... you don't know..CYOU...Like I do:-)

This stock has dipped big....now's the time to go back to neglected CYOU and enjoy the profits that are going to be flooding in from a PRIZED  Sequal video game just released in September.

2 Comments – Post Your Own

#1) On September 30, 2009 at 8:56 PM, Varchild2008 (84.50) wrote:

DISCLOSURE!!!!!!!

(sorry forgot)

1) I own shares of GAME

2) I DO NOT own any shares of CYOU

3) I DO have plans to eventually own some shares of CYOU but probably not happening tomorrow or this week.... Paycheck's next week for me... I am definitely buying into CYOU next week IF my bills will let me :-\   I hate bills..

So yes.. I am pumping a stock I want to buy into?  So?  Why would I TRASH a stock I want to buy shares of???? seriously?

And ultimately.. I am just trying to generate some research here... Get people to do more than just hold shares of CYOU and wimper about the good ole days when CYOU was trading over $40 a share. 

The reality... is that $40 a share was NOT overvaluing CYOU. 
$19.00 was simply undervaluing it.

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#2) On December 31, 2010 at 4:08 AM, HARE90 wrote:

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