Jan 12, 2010 (Chinavestor) We've been paying a close attention to the latest developments of Baidu.com (NASDAQ:BIDU), a stock that fell below $400 and to Shanda Interactive (NASDAQ:SNDA) vs. Shanda Games (NASDAQ:GAME). While Shanda Interactive (NASDAQ:SNDA) is getting killed today its spin-off online game unit, GAME, fell just half of its mother's. Let's see what's going on in here.
As far as Baidu.com (NASDAQ:BIDU) is concerned, we see no reason to alter our assessment of this Chinese blue chip at this time. As the following chart suggests, BIDU is a high quality company with a strong track record of sustainable revenue and earnings growth. We expect the company to report another outstanding quarter and thus current weakness is seen as an opportunity to buy rather then sell.
Looking at BIDU from a technical point of view, the company is trading at the lower end of its trading envelope, suggesting that a re-bounce is very possible and if that happens, BIDU can reach $450 in a couple of days. We have been arguing that the stock is oversold - our indicator picked up BIDU a few days earlier. Bottom fishing time is here!
Another industry leader - from the online game developer and operator industry - is Shanda Interactive (NASDAQ:SNDA) and its online game unit, Shanda Games (NASDAQ:GAME). Seasoned investors remember to the largest NASDAQ IPO of 2009 - Shanda's spin-off of its online game unit, raising $1 billion. Some of our clients wanted to know if Shanda Interactive (NASDAQ:SNDA) is a sell after falling over 6% today - or what's the story here. There are two reasons for the fall:
- Shanda (NASDAQ:SNDA) and the whole online game sector as a whole has been on fire lately - just as we pointed it out in previous overbought reports. So a technical pull back on a negative market day comes as a no surprise.
- The price discrepancy between Shanda Games (NASDAQ:SNDA) and Shanda Interactive (NASDAQ:GAME) has reached 17.5%, its highest reading ever, thus a sharper correction for SNDA is natural.
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