Short This Stock and a CAPS Contest Update!
Next week is a big week for the CAPS Champion of the World contest because it marks the end of the second quarter of the contest. That means on Monday the 16th, we'll be announcing our second big winner. The top rated folks currently competing for that honor are:
Now, if you're not in that group, don't fret. You still have 6.5 trading days to vault yourself to the top of the list. And if you need an idea, you're in luck. Our team has another short idea for you today (REMEMBER: you must rate at least one of our ideas in order to be eligible to win).
Short Netease.com (NTES)
When it comes to investing in China, we have one rule at Global Gains: Never EVER invest opposite the Chinese government. But if you buy or own NTES today, a foreign-owned online gaming company in China, that's exactly what you're doing.
The PRC government in recent weeks has announced plans to restrict foreign involvement in the Chinese online gaming space (which would ding Netease.com, its shareholders, and its WoW partnership with Blizzard) and has also said that it is considering shutting down access to the company's World of Warcraft game in China.
Now, NTES has other businesses in country, but this would be a big hit if it happened, or if the government levied some sort of tax or pernalty on operatiosn. Further, the associated pressures of this happening, with the stock priced at 9x sales is not at all accounted for in the valuation.
The thesis here then is not that NTES is a bad business, but rather that the potential for Chinese government intervention will cause the market to re-evaluate the risk profile here -- and thus the stock price -- for the worse.