Why Is SouFun (SFUN) Down 38.7% Since Last Earnings Report?

A month has gone by since the last earnings report for SouFun (SFUN). Shares have lost about 38.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is SouFun due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Fang Holdings Reports Q1 Loss, Revenues Down Y/Y

Fang Holdings reported first-quarter 2019 non-GAAP net loss of 2 cents per share. Total revenues of $51.9 million decreased year over year due to a decline in revenues from listing and e-commerce services.

Fang Holdings completed the spin-off of its wholly-owned subsidiary, China Index Holdings Limited ("CIH") on Jun 11, 2019. The company’s first-quarter 2019 results do not include the separation of CIH and its associated business and results of operations. The company plans to remain focused on its core internet advertising, listing, and leads business lines, which are anticipated to grow throughout 2019.

Revenues in Detail

Marketing services revenues came in at $17.2 million compared with $17.3 million in the year-ago quarter.

Listing services revenues of $21.4 million decreased 20.1% due to lower number of paying members.

Revenues from value-added services came in at $8.7 million, up 3.1% from the prior-year quarter.

Financial services revenues of $3.5 million declined 30.8% from the year-ago quarter owing to a decrease in average loan receivable balances.

Revenues from e-commerce services decreased 84.9% year over year to $1.1 million owing to the company’s reversion to a technology-driven open platform model.

Profitability Performance

Gross profit decreased 8.4% from the year-ago quarter to $40.4 million. Adjusted EBITDA came in at $6.9 million compared with $7.1 million in the prior-year quarter. Operating loss came in at $2 million compared with the year-ago period operating loss of $3.9 million, owing to a decline in operating expenses.

Operating expenses of $42.4 million decreased 11.8% year over year. Selling expenses of $18.6 million increased 12.9% year over year as a result of higher advertising and promotional expenses. General and administrative expenses decreased to $23.9 million from $31.5 million in the year-ago quarter due to decrease in bad debt and staff cost.

Balance Sheet

Fang Holdings exited first-quarter 2019 with cash and cash equivalents, restricted cash (current and non-current) and short-term investments of $477.1 million compared with $463.6 million at the end of the prior quarter. Long-term loan was $122.47 million compared with $123.22 million at the end of the prior quarter.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

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