Why Chinese Cloud Service Provider Kingsoft Shares Are Falling Today
Portfolio Pulse from Nabaparna Bhattacharya
Kingsoft Cloud Holdings Limited (NASDAQ:KC) shares dropped after reporting Q3 FY23 revenue of $222.754 million, below the expected $244.77 million, and a 17.5% Y/Y decline. Adjusted EPS was $(0.18), worse than the $(0.17) loss forecasted. The fall in revenue was attributed to scaling down CDN services and phasing out unprofitable clients. Public cloud services revenue decreased by 24.5%, and enterprise cloud services by 2.2%. However, gross profit rose by 60.3%, with a gross margin of 12.1% compared to 6.2% in the previous year, due to strategic adjustments and cost control. The company has $358.0 million in cash and equivalents. CEO Tao Zou plans to deepen strategic planning with Xiaomi and Kingsoft for AI cloud demand. KC shares fell by 12.16% to $4.84.
November 21, 2023 | 4:39 pm
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NEGATIVE IMPACT
Kingsoft Cloud's Q3 revenue and EPS missed estimates, causing shares to fall. Despite a revenue decline, gross profit and margin improved significantly.
The stock price of Kingsoft Cloud is likely to experience short-term negative pressure due to the reported earnings miss and revenue decline, which are key factors investors consider. The improvement in gross profit and margin may provide some cushion, but the immediate reaction to earnings reports typically weighs heavily on stock performance.
CONFIDENCE 90
IMPORTANCE 90
RELEVANCE 100