Quick Win by the Algorithm: Bitauto Holdings Limited (NYSE: BITA) Dives Deep Under Market Surface Down To -30.73% In 1 Month

Quick Algorithm

“As we continue to make healthy progress across our business lines, we are optimistic about Bitauto’s profitability outlook for 2018. We expect to expand margins over the coming quarters as we drive cost saving synergies between Bitauto and Yixin, increased efficiencies in our media business, and economies of scale from Yixin.”

– Ms. Cynthia He, Chief Financial Officer of Bitauto

BITA logo

[Image Source: www.ticker.tv]

Over the March Bitauto stock price experienced ups and downs. During the first third of the month the stock price oscillated around $29 per share and jumped up to $32.16 per share on March 12. However, after the financial results for the last quarter of 2017 and the whole year were released on March 15, 2018, the price momentarily dropped down to $26.15 and continued to dive until the end of the month reaching the minimum of $19.66 per share on March 27. So what is the driver behind that growth  and what happened during 2017 financial year? The reason lies in the company’s results for 2017 released with the following highlights:

  • Fourth quarter revenue increased 53.8% year-over-year
  • Revenue from transaction services increased 115.5% year-over-year
  • Net loss in 2017 was RMB1.43 billion (US$219.3 million), compared to a net loss of RMB338.0 million (US$51.9 million) in 2016

From the above figures one can see that despite that the company increased its revenues on quarter and annual basis comparing it to the previous year performance, the company experience significant increase in the net loss figure. Therefore, it is not a surprise that such overall performance impacted investment image of the company in the market. At the same time, the company’s management have positive outlook for the first quarter of 2018. As such, Bitauto currently expects to generate revenue in the range of RMB1.96 billion (US$301.8 million) to RMB2.01 billion (US$309.5 million) in the first quarter of 2018, representing a 37.8% to 41.3% increase from the corresponding period in 2017. This forecast reflects revenues net of value-added tax under the new revenue recognition standard ASC 606, which Bitauto adopted on January 1, 2018. If presented on gross basis, as consistent with the year 2017, forecasted revenues would be between RMB2.12 billion(US$325.6 million) to RMB2.17 billion (US$333.8 million) in the first quarter of 2018, representing a 37.1% to 40.5% increase from the corresponding period in 2017.

[Image source: https://finance.yahoo.com]

Finally, the latest Yahoo Finance data supports the positive outlook and shows that 6 out of 6 analysts took the buy position with regards to Bitauto’s stock.

[Image source: https://finance.yahoo.com]

On February 28, 2018, I Know First issued a bearish 1 month forecast for Bitauto Holdings Limited (NYSE: BITA). The forecast illustrated a signal of -56.90 and a predictability of 0.24. In accordance with the forecast, BITA’s stock returned -30.73% over this period, highlighting the accuracy of the prediction produced by the I Know First algorithm.

Current I Know First subscribers received this bullish BITA forecast on February 28, 2018.

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Bitauto Holdings Limited (NYSE: BITA) provides Internet content and marketing, and transaction services for the automotive industry in the People’s Republic of China. The company operates in three segments: Advertising and Subscription Business, Transaction Services Business, and Digital Marketing Solutions Business. The Advertising and Subscription Business segment provides advertising services, including new automobile pricing and promotional information, specifications, reviews, and consumer feedback to automakers through its bitauto.com and taoche.com Websites, as well as mobile applications. It also provides Web-based and mobile-based integrated digital marketing solutions to automobile dealers. The Transaction Services Business segment operates automotive transaction services platform that provides e-commerce transaction services to automobile dealers; and offers online automotive financial platform services to consumers and financial institutions, including banks, auto finance companies, and insurance companies. The Digital Marketing Solutions Business segment provides one-stop digital marketing solutions, such as Website creation and maintenance, online public relations, online marketing campaigns, and advertising to automakers. The company also distributes its dealer customers’ automobile pricing and promotional information through its Internet service provider partners. Bitauto Holdings Limited has a strategic partnership with J.D. Power to conduct joint research and development in the area of big data and artificial intelligence. The company was founded in 2000 and is headquartered in Beijing, the People’s Republic of China.


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