Sohu (SOHU) AI Stock Analysis

Compare

322 Followers

Top Page

Sohu

(NASDAQ:SOHU)

Rating:54Neutral

Price Target:

$10.50

▲(6.38%Upside)

Sohu's overall score reflects financial challenges with declining revenues and profitability issues, offset partially by a strong balance sheet. The technical indicators suggest a lack of momentum, and while the valuation appears attractive, concerns remain about future earnings potential, especially in the gaming sector.

Positive Factors

Earnings

Sohu reported better-than-expected 1Q25 due to outperformance in online games, which exceeded guidance range.

Innovation

Sohu has started to leverage various AI models on games development.

Negative Factors

Financial Outlook

Management commented that macro remains soft and expects 2H25 ad spend budget to remain cautious.

Sohu (SOHU) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$296.75M

Dividend YieldN/A

Average Volume (3M)146.07K

Price to Earnings (P/E)2.7

Beta (1Y)0.81

Revenue Growth2.83%

EPS GrowthN/A

CountryUS

Employees4,300

SectorCommunication Services

Sector Strength93

IndustryElectronic Gaming & Multimedia

Share Statistics

EPS (TTM)-0.55

Shares Outstanding30,065,400

10 Day Avg. Volume60,779

30 Day Avg. Volume146,072

Financial Highlights & Ratios

PEG Ratio0.39

Price to Book (P/B)0.46

Price to Sales (P/S)0.00

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$17.00

Price Target Upside72.24% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering1

Sohu Business Overview & Revenue Model

Company DescriptionSohu.com Limited provides online media, video, and game products and services on PCs and mobile devices in China. The company offers online news, information, and content services through the mobile phone application Sohu News APP, mobile portal m.sohu.com, and www.sohu.com for PCs; and online video content and services through mobile phone application Sohu Video APP and tv.sohu.com, and ifox, a PC video application. The company is also involved in the development, operation, and licensing of online games for PCs and mobile devices, which include massive multiplayer online role-playing games, and casual and strategy games. In addition, it operates focus.cn, which provides online real estate information and services; and 17173.com website, which provides news, electronic forums, online videos, and other online game information services to game players, as well as offers mobile game distribution services. Further, the company provides paid subscription services, interactive broadcasting services, and sub-licensing of purchased video content to third parties. Sohu.com Limited was incorporated in 1996 and is headquartered in Beijing, China.

How the Company Makes MoneySohu primarily generates revenue through online advertising, which involves selling advertising space on its various platforms, including its news portals and other media properties. Advertising revenue is driven by the traffic and user engagement on its websites and mobile applications. Additionally, Sohu's search engine, Sogou, contributes to its revenue through pay-for-click and other performance-based advertising services. Another significant revenue stream for Sohu comes from its online gaming subsidiary, Changyou, which develops and operates a portfolio of online games. These games generate income through user subscriptions, in-game purchases, and virtual item sales. The company's partnerships, particularly in the gaming sector, also play a crucial role in monetizing its services and expanding its user base.

Sohu Earnings Call Summary

Earnings Call Date:May 19, 2025

(Q1-2025)

% Change Since: -9.03%|

Next Earnings Date:Aug 11, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mix of positive and negative aspects. While there was significant growth in the online games segment and a substantial tax reversal benefit, the decline in marketing services revenue and overall revenue raise concerns. Future projections indicate potential challenges, particularly in the gaming sector.

Q1-2025 Updates

Positive Updates

Online Game Revenue Exceeds Expectations

Online game revenues reached $117 million, flat year-over-year and up 7% quarter-over-quarter, surpassing prior guidance due to high-quality content updates and improved player engagement.

Reversal of Tax Expenses

A tax expense previously recognized as an uncertain tax position was reversed this quarter, resulting in a $199 million benefit, contributing significantly to the GAAP net income of $182 million.

Social Network Platform Development

Sohu Media platform focused on enhancing social features, successfully engaging more users and broadcasters, and generating high-quality content through events like the Sohu Video influencers convention and the Sohu News Marathon.

Negative Updates

Decline in Marketing Services Revenue

Marketing services revenues were $14 million, marking a 15% decrease year-over-year and a 27% decrease quarter-over-quarter, with luxury goods and alcohol sectors contributing to the downturn.

Overall Revenue Decline

Total revenues were $136 million, representing a 3% year-over-year decrease despite a 1% quarter-over-quarter increase.

Expected Decrease in Online Game Revenues

For the next quarter, online game revenues are expected to decline by 28% to 35% year-over-year and 10% to 18% quarter-over-quarter, reflecting ongoing market challenges.

Company Guidance

In the first quarter of 2025, Sohu's financial performance showed mixed results with total revenues reaching $136 million, reflecting a 3% decrease year-over-year but a slight 1% increase quarter-over-quarter. Marketing services revenues were reported at $14 million, marking a 15% decline year-over-year and a sharper 27% drop quarter-over-quarter. However, online game revenues performed well, totaling $117 million, remaining flat year-over-year but increasing by 7% quarter-over-quarter. The company reported a GAAP net income of $182 million, a significant improvement compared to the net loss of $25 million in the first quarter of 2024 and $21 million in the fourth quarter of 2024, largely due to the reversal of a $199 million tax expense previously recognized as an uncertain tax position. Excluding this reversal, the non-GAAP net loss attributable to Sohu.com Limited was $16 million, compared to a net loss of $22 million in the same quarter the previous year and a net loss of $15 million in the previous quarter. For the second quarter of 2025, Sohu projected marketing services revenues to range between $60 million and $70 million, indicating an annual decrease of 14% to 19% but a sequential increase of 17% to 24%. Online game revenues were expected to be between $96 million and $106 million, implying an annual decline of 28% to 35% and a sequential decrease of 10% to 18%.

Sohu Financial Statement Overview

Summary

Sohu's financial performance is challenged by declining revenues and persistent net losses, reflecting inefficiencies and high operational costs. The company has a strong equity position with low leverage, but negative cash flows and low returns on equity highlight significant financial hurdles.

Income Statement

Neutral

Sohu has faced declining revenue with a decrease from $600.7M to $598.4M in 2024, representing a slight contraction. The company struggles with profitability, as evidenced by a consistent negative net income and EBIT over recent years. The gross profit margin remains strong at 72.29% for 2024, but the net profit margin is negative at -16.76%, indicating inefficiencies and high operational costs.

Balance Sheet

Neutral

Sohu's balance sheet shows a relatively strong equity position, with a debt-to-equity ratio of 0.04, suggesting low leverage. The equity ratio stands at 53.16%, indicating a solid equity buffer. However, the return on equity is negative at -10.87% for 2024, highlighting challenges in generating returns for shareholders.

Cash Flow

Neutral

The cash flow statement reveals a declining trend in free cash flow, with a fall from -$43.98M in 2023 to -$67.94M in 2024. Operating cash flow also turned negative, indicating cash flow challenges. The operating cash flow to net income ratio is 0.48, reflecting issues in converting profits into cash flow.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
598.51M	598.40M	600.67M	733.87M	835.58M	749.89M
	Gross Profit
441.03M	432.57M	454.92M	542.30M	630.90M	532.45M
	EBIT
-117.08M	-109.40M	-87.31M	2.78M	97.47M	73.37M
	EBITDA
-86.57M	-76.97M	-37.09M	30.43M	133.43M	114.72M
	Net Income Common Stockholders
-53.88M	-100.27M	-30.38M	-17.34M	69.27M	-36.53M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
599.15M	904.42M	960.27M	1.17B	1.40B	317.80M
	Total Assets
874.59M	1.73B	1.88B	1.98B	2.25B	2.82B
	Total Debt
0.00	35.85M	35.31M	36.16M	36.12M	407.55M
	Net Debt
-599.15M	-124.08M	-327.19M	-661.66M	-962.83M	190.49M
	Total Liabilities
148.11M	811.98M	822.82M	867.07M	953.60M	1.79B
	Stockholders Equity
641.32M	922.34M	1.06B	1.11B	1.29B	347.37M
Cash Flow		Free Cash Flow
0.00	-67.94M	-43.98M	8.40M	-104.48M	61.43M
	Operating Cash Flow
0.00	-48.02M	-25.57M	32.24M	-62.28M	95.21M
	Investing Cash Flow
0.00	-113.36M	-291.67M	-232.79M	516.73M	419.77M
	Financing Cash Flow
0.00	-40.88M	-6.56M	-82.14M	-434.10M	93.59M

Sohu Technical Analysis

Technical Analysis Sentiment

Negative

Last Price9.87

Price Trends

50DMA

11.07

Negative

100DMA

12.20

Negative

200DMA

13.32

Negative

Market Momentum

MACD

-0.23

Positive

RSI

40.72

Neutral

STOCH

25.64

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SOHU, the sentiment is Negative. The current price of 9.87 is below the 20-day moving average (MA) of 10.70, below the 50-day MA of 11.07, and below the 200-day MA of 13.32, indicating a bearish trend. The MACD of -0.23 indicates Positive momentum. The RSI at 40.72 is Neutral, neither overbought nor oversold. The STOCH value of 25.64 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SOHU.

Sohu Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
GRVY	78 Outperform	$459.67M	8.01	14.97%	―	-33.83%	-38.30%
DDI	75 Outperform	$500.49M	4.26	13.91%	―	10.71%	21.74%
GDEV	66 Neutral	$290.08M	7.46		―	-5.57%	―
Sector *	61 Neutral	$14.08B	5.95	-4.18%	3.68%	2.79%	-36.29%
SOHU	54 Neutral	$296.75M	2.66	10.08%	―	2.83%	―
NCTY		$101.67M	3.07	-22.85%	―	―	―
MYPS	58 Neutral	$176.37M	―	-11.64%	―	-11.11%	-90.96%

* Communication Services Sector Average

Performance Comparison

SOHU

Sohu

9.87

-2.24

-18.50%

GRVY

Gravity Co

66.15

-8.56

-11.46%

NCTY

The9

11.51

4.06

54.50%

DDI

Doubledown Interactive Co

9.90

-1.57

-13.69%

GDEV

Nexters

16.00

-1.30

-7.51%

MYPS

PLAYSTUDIOS

1.41

-0.82

-36.77%

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.