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Why Autohome Is Down 13% Today


Jan. 14 2019, Published 2:14 p.m. ET


Chinese online automobile content provider Autohome’s (ATHM) stock is known to be highly volatile. In December, the stock fell 5% after surging 13.8% in the previous month. Nonetheless, it managed to end 2018 with solid 24.7% gains. Investors’ high expectations for the company’s growth potential due to strong Chinese auto sales have helped ATHM surge over the last two years, during which the company has yielded solid 214.6% returns.

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Today’s pessimism

Earlier today, China’s Association of Automobile Manufacturers (or CAAM) revealed that China’s automobile sales fell 13% in December, reported Reuters. China’s car sales in 2018 fell 2.8% year-over-year to 28.1 million vehicle units.

December was the sixth consecutive month and the seventh month in 2018 when China sales fell year-over-year. The Reuters report quoted senior CAAM official Shi Jianhua saying the space “still faces relatively large pressures in the short-term.”

Autohome’s business depends highly on vehicle sales in the Chinese market, which is why the negative Chinese auto sales data hurt investor sentiment. The negative feeling could be one reason why the stock is down over 14% today.

It’s important to note that a near-term recovery in Chinese sales could regain investors’ confidence and turn Autohome positive again.

Today at 12:50 PM ET, ATHM was down 13.0%. Other Chinese companies (MCHI)(FXI) NIO (NIO), Alibaba (BABA), Uxin (UXIN), Baidu (BIDU), Tencent Music (TME), and Tencent Holdings (TCEHY) were up 6.5%, down 0.9%, down 9.4%, down 1.7%, down 4.4%, and down 1.1%, respectively.


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