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Bear of the Day: Autohome Inc. (ATHM)

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Autohome Inc. ATHM is a leading online automobile shopping hub in China. But its shares have been hammered since February and its earnings outlook continues to trend in the wrong direction.

The Basics

Autohome is the leading online search platform for consumers in China. The firm offers original content, a comprehensive auto library, and a variety of auto listing information. The company works with both dealers and automakers and it covers the entire car purchase and ownership cycle.

ATHM’s services also include data analysis, marketing, sales leads, and more. Overall, its Autohome “Mall” is a full-service digital platform that aims to help facilitate transactions for automakers and dealers.

Autohome has consistently grown its sales amid a booming Chinese auto market. However, its stock price performance hasn’t always matched its rather consistent top-line expansion.

The nearby chart shows ATHM’s wild up and down ride in the past five years. This includes a 70% downturn since mid-February 2021. And it tumbled once again Wednesday.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

Bottom Line

Autohome’s revenue and adjusted earnings are projected to slip 4% and 17%, respectively this year, based on our Zacks consensus estimates. On top of that, analysts have continued to lower their longer-term EPS outlooks and its recent revisions activity helps it land a Zacks Rank #5 (Strong Sell). The stock also earns an “F” grade for Growth in our Style Scores system.

The recent selling has pushed the stock into oversold RSI (30 or under) territory. This could mean it’s due for a bit of a comeback as the broader market breaks new ground.

That said, Wall Street has started to shy away from many Chinese stocks in 2021, including giants like Alibaba BABA. Therefore, ATHM might be considered more of a trader’s stock for the time being.

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