September 26, 2011 (Chinavestor) Shares of Youku.com Inc. (NYSE:YOKU) surged 21.6% last Friday, making it the best China stock for the day. The stock fell to all time lows a day before and all it needed was a spark. That came when Susquehanna analyst Ming Zhao upgraded the stock to "positive". But if history is any guide into the future, investors shouldn't raise their hopes much for this week. Here is why.
We looked up all those instances when Youku.com Inc. (NYSE:YOKU) surged 20% or more. We found only two instances, the day after the IPO, when that happened and one four months after. Then we looked up days when Youku.com Inc (NYSE:YOKU) jumped over 15% or more and we found one day, August 10, 2011, when the stock surged 17.9%.
Then we looked up what happened the following five days after the surge. Shares of Youku.com Inc. (NYSE:YOKU) fell -0.4% on average after the August 10 surge. Similarly, shares of the company fell -6.1% and advanced a mere 0.7% after similar surged in the past.
While three instances are not indicative from a statistical point of view, it is still important to know what was happening in the past when such surged occurred. Historical data suggests a much limited upside, if any, for the stock for the upcoming week.
Related 10 page long fundamental analysis:YOKU Initiated HOLD at Chinavestor