Zhihu Answers Investor Doubts With Improving Margins
Portfolio Pulse from The Bamboo Works
Zhihu Inc. (NYSE:ZH) reported its first-ever revenue decline since its New York listing, with a 3.3% drop in Q1. Despite improving its gross margin by over 5 percentage points, the company's net loss slightly improved, but its adjusted non-GAAP loss widened. Zhihu aims to achieve non-GAAP profitability by year-end. The stock fell 2.5% post-announcement and has lost nearly 40% of its value this year. Comparatively, Baidu (NASDAQ:BIDU) and Reddit (NYSE:RDDT) have higher price-to-sales ratios.
June 13, 2024 | 1:35 pm
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NEGATIVE IMPACT
Zhihu reported its first-ever revenue decline since its New York listing, with a 3.3% drop in Q1. Despite improving its gross margin, the company's net loss slightly improved, but its adjusted non-GAAP loss widened. Zhihu aims to achieve non-GAAP profitability by year-end. The stock fell 2.5% post-announcement and has lost nearly 40% of its value this year.
The revenue decline and widening non-GAAP loss are negative indicators, leading to a 2.5% drop in stock price. The company's aim for non-GAAP profitability by year-end is a positive long-term goal but does not mitigate the short-term negative impact.
CONFIDENCE 95
IMPORTANCE 90
RELEVANCE 100
NEUTRAL IMPACT
Baidu, which also hosts user communities similar to Zhihu, trades at a higher price-to-sales ratio of 1.78 compared to Zhihu's 0.58. This indicates a stronger market position and investor confidence in Baidu.
Baidu's higher price-to-sales ratio compared to Zhihu indicates a stronger market position. However, the news primarily focuses on Zhihu, making the impact on Baidu neutral.
CONFIDENCE 80
IMPORTANCE 50
RELEVANCE 30
NEUTRAL IMPACT
Reddit trades at a significantly higher price-to-sales ratio of 11 compared to Zhihu's 0.58, reflecting stronger investor confidence and market position.
Reddit's significantly higher price-to-sales ratio compared to Zhihu indicates stronger investor confidence. However, the news primarily focuses on Zhihu, making the impact on Reddit neutral.
CONFIDENCE 75
IMPORTANCE 40
RELEVANCE 20