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Here's Why Investing in Qihoo 360 a Smart Idea

July 18, 2014 | About:

Qihoo 360 Technology (QIHU) has made quick progress in the Chinese web industry. The organization is presently giving stiff rivalry to Baidu (BIDU), taking endlessly piece of the pie, and is rubbing shoulders with the likes of Tencent (TCEHY) in the gaming market as well. Looking forward, will Qihoo have the capacity to sustain its stupendous performance, or will it wind up vanquished because of the presence of greater peers? We should attempt and figure out.

Qihoo is developing at a, fast pace. In the final quarter, its quarterly revenue increased 115% year over year to $221.6 million, agreeably beating analysts' estimate of $209 million. Moreover, Qihoo's earnings also increased an eye-popping 218% year over year to $0.70 per share, outpacing the consensus estimate of $0.43 per share.

Strength counts

Qihoo's success is a result of the organization's cement steps to strengthen its versatile security and portable application store products. With its PC-based dynamic users arriving at 475 million, Qihoo enjoys a prevailing position in the Chinese web industry. Additionally, 70% of China's dynamic PC web users use Qihoo's PC browser. Likewise, Qihoo is the pioneer in smartphone security in China with 70% piece of the pie.

Going ahead, Qihoo expects its heading position in Android-based application distribution in China to drive results. Qihoo leads this business sector with more than 40% of the business in its pack. Further, the organization's search motor is witnessing significant movement gains, hitting a piece of the pie of 23% at the end of 2013.

This is a huge accomplishment for the organization since Baidu was the predominant player in the search industry in China at one purpose of time. In May last year, Baidu ordered 70% of the search advertise in China. In any case, that metric has descended to 58% now, as indicated by Chinese research firm CNZZ. Going ahead, Qihoo is resolved to narrowing the hole with Baidu further by attaining 35% share of the Chinese search advertise before the end of 2014. What's more, the organization has officially dispatched a couple of versatile search related products to enhance its position on this stage as well.

Gaming development

Then again, Qihoo's diversion stage is also pulling in amusement developers and users in great numbers. Qihoo runs something like 800 games on its amusement stage and is including subscribers at a respectable pace. At the end of the final quarter, Qihoo had something like 700,000 paying gaming accounts as contrasted with 560,000 in the former quarter. Going ahead, as the Chinese gaming business is required to develop at a fast rate, Qihoo should see further improvements in this metric.

Then again, Qihoo has to defeat a titan as Tencent in an offer to make its check on the Chinese gaming industry. Tencent is the biggest amusement operator in China. In what would appear to be a striking truth, Tencent is the world's biggest organization in terms of diversion related revenue, as indicated by research firm Newzoo.

Tencent's QQ Games entry has been a huge success and now the organization is amplifying its arrive at through its prevalent Wechat messaging service. The Wechat customer also distributes computerized games and has 300 million registered users in China. So, Tencent has a strong hold in the Chinese gaming industry which Qihoo will need to overcome on the off chance that it is to make genuine progress later on.


Conservative investors may now like Qihoo in the wake of taking a look at its trailing P/E of 114, which appears profoundly exaggerated. Be that as it may, the forward P/E of 23 is very reasonable and indicates quick earnings development. Qihoo has to be sure conveyed solid earnings development in the past and provided for its developing strength in the Chinese web industry, the streak could extremely well proceed later on. So, taking a gander at its development rate, investors shouldn't fret paying a premium for the organization.

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