Perfect World (PWRD) reported very good numbers this morning but due to 'disappointing earnings' (some of it due to 3 day shutdown in China due to mourning period for the earthquake) the stock is down over 9% this AM.
I've been trading the stock since then, flipping in and out, and doing quite well considering the relatively poor action (almost straight down). I had re-entered a larger stake last Friday, and then have been adding in smaller pieces this week as the stock continued to be weak (and cheaper by the minute). Now this morning, only a few weeks after the last earnings report, the company is out with raised guidance, increase revenue projections from 0-5% growth to 10-15%. Perhaps this company lowballed due to the earthquake mourning period, and not expecting the market to trash the stock so thoroughly decided they should give a more realistic growth rate. Or perhaps business just became THAT much better in the past 3 weeks ;) This name remains dirt cheap relative to its growth prospects, so we'll continue to take advantage of the market missing this, even though it might cost us a bit in the near term.
The stock is now trading back to the mid $24s range, up 13% - as I outlined in the previous post on this stock I'll continue to cut back on this name as it approached resistance which in this time frame means mid $25s or so. Since I did buy some here in the $21s/$22s the past few sessions I am going to sell those shares for a quick 12-13% gain and then keep what I bought in the $23s. If/when it breaks over resistance ($26) we'll just put the seat belt on and remain in an upright position. Until then it remains a trading position... if the market continues to thrash it we'll buy back more in the lower $20s. And keep repeating until the market wakes up to the opportunity.
Perfect World is back down to a 1.1% stake after this morning's sales.
- Perfect World Co., Ltd. (Nasdaq: PWRD), a leading online game developer and operator in China, today announced that it expects revenue for the second quarter of 2008 to be between RMB333 million and RMB348 million, which represents a sequential increase of 10% to 15%. This compares to the previously announced guidance of a 0% to 5% increase in revenue.
- Despite the impact of the Sichuan earthquake, the Company is able to raise guidance due to stronger than expected results from the launch of new expansion packs in the domestic market and favorable results from recent marketing campaigns.
