Citron Research Doesn’t Understand Qihoo 360’s Business Model

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  • on November 2nd, 2011

Famed short-seller Andrew Left of Citron Research released a report Tuesday calling Qihoo 360 ($QIHU) the “the most overvalued and misunderstood Chinese Internet Stock” and giving it a price target of 5 dollars.

Qihoo 360 is misunderstood, by Andrew Left.

If you want to understand the business, read the report below that was prepared by RedTech Advisors in August. CEO Zhou Hongyi is no saint and Qihoo 360 has its operational challenges, but I would be shocked if the company is cooking its books as Longtop, Sino-Forest et al did.

I have no position in Qihoo 360. I just do not like to see stocks manipulated by overhyped, poor analysis, either on the long or short side.

Qihoo 360 is a popular short and I have spoken with several researchers working on a short Qihoo 360 thesis, though I do not know if any of them worked with Citron Research on this report. I told them all I thought they were crazy, misunderstood the business, and were wasting their time. But some people want to take down a Chinese Internet company, whether or not the facts support their arguments.

Qihoo 360 has already issued a response and iChinaStock has translated a rebuttal of the Citron report.

RedTech Advisor’s deep dive into Qihoo 360:

You can follow me @Bill on Stocktwits@Niubi on Twitter and @Billbishop on Sina Weibo.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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