Sohu Reports First Quarter Results and Special Dividend, Stock Up 20%

Sohu will receive a special dividend of $337 million from its subsidiary Changyou.

Author: Lucas Hahn Ltd. (Nasdaq: SOHU) stock jumped 20 percent today as the Internet company's top and bottom lines both beat expectations during the first quarter of 2019, while its subsidiary Changyou announced a special dividend.

Sohu stock gained $3.10, closing at $18.48 per share on Monday.

Sohu reported $431 million in revenue for the quarter ended March 31, well above the previous quarter's $390 million to $415 million guidance. Quarterly revenue decreased 5 percent year-over-year.

Sohu's losses decreased from $93 million in the first quarter of 2018 to $57 million in the first quarter of this year. This translates to a loss of $1.44 per ADS, below the $1.53 loss which analysts had projected.

"In the first quarter, we delivered better-than-expected revenue, mainly driven by the solid performance of our search and game businesses," said Charles Zhang, Sohu's chairman and CEO.

Sohu's core businesses include Sohu Media and Sohu Video. The company also controls the search engine Sogou Inc (NYSE: SOGO) and the online gaming company Ltd. (Nasdaq: CYOU). Sohu includes its share of revenue from these companies in its results.

Sogou and Changyou also reported their results separately today.

Changyou announced a special dividend, with Sohu receiving $337 million. However, this dividend will not go to Sohu's shareholders; it will be used to support Sohu's operations.

During the first quarter, Sohu reported $277 million in advertising revenue, $99 million in online gaming revenue, and $55 million in revenue from other sources.

Sohu expects second-quarter revenue ranging from $469 million and $494 million. The company's GAAP net loss for the second quarter should range between $40 million and $50 million, or $1 to $1.25 per fully diluted ADS.  

Analysts rate Sohu stock a "hold," with an average target price of $23.60 per share, 27.7 percent above Monday's closing price.

Sohu was founded in 1996 and is based in Beijing. The company was one of the first Chinese Internet companies to list on a U.S. exchange, and it went public on Nasdaq in 2000.

Sohu stock is up 8.3 percent year-to-date.