Why Did Phoenix New Media Ltd. ADR Jump on Tuesday?

Markets Motley Fool

What happened

Continue Reading Below

Shares of Chinese media company Phoenix New Media (NYSE: FENG) skyrocketed on Tuesday. The stock jumped as high as 31.1% and closed the trading day up 30.3%. The stock's huge gain comes about a week after the company's better-than-expected third-quarter results.

While it's impossible to know the exact reason for Phoenix New Media's gain on Tuesday, it likely reflects more positive sentiment from investors as they digest the implications of Phoenix's third quarter. The company's revenue and non-GAAP earnings per American depositary share (ADS) were significantly above analysts' estimates for the quarter.

Phoenix stock is up 50% since it reported earnings last week.

So what

For its third quarter, Phoenix posted a non-GAAP profit per ADS of $0.07, up 39% year over year. On average, analysts were expecting a non-GAAP profit per ADS of $0.01. Phoenix revenue was 426.6 million Chinese renminbi, or about $64 million -- up 18% year over year. On average, analysts were expecting revenue of about $60.9 million.

Continue Reading Below

Now what

Looking ahead, Phoenix expects a big year-over-year jump in its fourth-quarter revenue. Management said it expected fourth-quarter revenue to be between 433 million and 448 million Chinese renminbi. The midpoint of this guidance is up 22% year over year compared to Phoenix's fourth quarter last year. In other words, management expects revenue growth to accelerate further in Q4.

10 stocks we like better than Phoenix New Media
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Phoenix New Media wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of November 6, 2017

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.