Although global financial markets have been completely bloodwashed in the past two days, there are still some assets that are bucking the trend. The performance is quite “tough,” such as Sohu. According to Futu statistics, although Sohu quickly rebounded after opening sharply lower yesterday, it eventually closed up 1.31%.

(Source: Futu)

Performance resumed growth, and continued repurchases showed confidence

The reason why Sohu is quite “tough” is mainly because it has just handed over an impressive questionnaire.

According to the 2024 Q2 financial report released by Sohu, Sohu achieved total revenue of 0.172 billion US dollars this quarter, up 13% year on year and 24% month on month, achieving growth exceeding expectations. Among them, brand advertising revenue was 20 million US dollars, which was still down year on year, up 24% month on month, which is the high level previously expected; online game business revenue was 0.147 billion US dollars, up 24% year on year and 25% month on month, exceeding previous expectations.

Obviously, Sohu, which “regained” growth, certainly gave the market hope and gave investors a certain level of confidence.

Although Sohu is still a net loss this season, it is more of a strategic loss due to the increase in forward-looking investment, such as in expanding the scale of the platform and user acquisition, exchanging time for space, sacrificing short-term profits in exchange for long-term share and seeking greater value.

It is worth mentioning that just after Sohu's quarterly report was released, foreign investment bank Jefferies raised Sohu's target price from $13.9 to $15.2.

How much is a company really worth? I'm sure there's no one who understands that better than the company's management. Naturally, Sohu's management also knows that the company's value is undervalued, so they started a buyback at the “low point” last year, and further increased it at the beginning of March this year: increasing the total planned repurchase amount of up to 80 million US dollars to a maximum total amount of 0.15 billion US dollars.

Highlight the company's management's continued confidence in the company's long-term growth prospects. As of August 1, 2024, the company has repurchased approximately 2.35 million ADs shares at a cost of approximately $26 million.

It seems that Sohu's management clearly has more confidence in the future of the company. The second quarterly report is not only a self-attestation; it may also be a positive inflection point.

Multi-line collaboration is blossoming, and social results can be expected with differentiated layouts

Simply put, now the game is Sohu's “cash cow,” the media is the foundation, and video is the future. From a business model perspective, Sohu will continue to move forward mainly on the “two legs” of advertising and membership. As Sohu's content ecosystem continues to enrich and the user experience continues to improve, Sohu's commercial value is bound to “skyrocket”.

Through continuous investment, exploration, and layout, Sohu's growth “roadmap” is also becoming more and more clear. Currently, it is mainly based on the following two lines.

First, protect your inventory. It is understood that businesses such as text, news, and media will balance “mass” and “quality”, maintain the vitality of Sohu News's content, and continue to be driven by the underlying logic of “1.0 distribution+2.0 social+AI application.” Among them, the newly launched “timeline” function in the Sohu News app is another tough move by Sohu to improve interactive social networking.

At the same time, “activity is content” is the business philosophy that Sohu has always pursued. Over the years, the original event IP created by the company has been well known, including the “Sohu News Marathon,” “Sohu Technology Forum,” “Sohu Finance Forum,” “Sohu Wine Industry Forum,” and “Sohu Fashion Festival,” which have not only enriched the content pool, but also enhanced the platform's user engagement and social interaction, thus locking in the budgets of more advertisers.

Among them, the “Sohu News Marathon” has been held for 16 sessions so far. It is not just an IP and symbol, but more like a “microcosm”, recording changes in the industry and iterations of Sohu. In addition, Sohu is also continuously innovating content marketing activities, such as the live interview program “BOSS1+1” and the Qingmu Project - Sohu Young Video Creators Contest.

Second, explore and increase. Video networking and live knowledge streaming are clearly the main battlegrounds.

This year, short video social networking was a major driving force for Sohu Video. The new Sohu Video App's “Follow Stream” is a video “social platform” that has grown out of it, which complements and links with the “timeline.”

According to our understanding, users can retweet, follow, and spend in the “Follow Stream”, and social networking will follow. According to industry analysts, compared to short video platforms dominated by algorithms, the Sohu Video App's “Attention Stream” cares more about fan stickiness and places more emphasis on content quality, opening up a new path in promoting high-quality content output. In Zhang Chaoyang's words, “The 'stream of attention' is dealing with people.”

This season, Sohu Video also organized a variety of online and offline activities to continue to develop an influential online fan community in different vertical fields. For example, the “2024 Sohu Video Dance Master Course” has attracted the attention and recognition of a large number of K-pop fans across the country. Next, the “2024 Sohu Video Dance Jump Contest” will be launched in early August. In addition, various events related to traditional Chinese “Hanfu” and photography were held, which also garnered significant traffic and high recognition.

The Sohu Video App “Follow Stream” is a high-quality vertical platform around PGC, UGC, and Vlog self-media short videos, forming an interesting, useful, and highly viewable content ecosystem. Judging from the logic of content, this is the base point for generating active users and a source of traffic and market. Trust in capital comes from scale, and if there is traffic, there is a market. This means that once the Sohu Video App's “Attention Stream” business model runs through, there will be endless possibilities to welcome it.

In terms of homemade content, Sohu also continues to add interest, continuing to enrich its film library by purchasing exclusive series, launching unique original content, and introducing short dramas. For example, the homemade drama “You Run to All Time and Space” and the Olympic-themed reality show “Like a Champion”, which launched this season, were all very popular with viewers and caused widespread discussion on various social media platforms.

On the path of live knowledge streaming, Sohu Video's performance has also been excellent.

Since it officially entered the market in 2019, the live broadcast has covered 11 popular sections, and all of them have been hit. There is an extremely rich ecosystem of live knowledge content, including matrix content covering many fields, such as “Astronomy and Physics Lecture Hall”, “World Major Events Express”, “Medicine, Health and Sports”, “Entertainment Award Distribution Center”, “Science Research Learning and Application”, “The Natural History Bureau”, “12 Hours in Literature and History,” “Popular Live Streaming Agencies,” and “Essential Courses for Baby Growth,” as well as benchmark IP sections such as “Zhang Chaoyang's Physics Course” and “Science Lecture Bureau”.

It is easy to imagine that as Sohu's various IP activities continue to circulate and spark discussion and dissemination on multiple platforms, it will not only gain recognition from more advertisers, but also further consolidate and enhance Sohu's influence and voice as a mainstream media.

Sohu's incremental business is rooted in the growing stock business, and the two complement each other. Due to incremental business, it is often necessary to “save” for a period of time to absorb and store more energy before it explodes. Therefore, Sohu's growth potential should not have been fully unleashed. Fortunately, now we have finally got off to a good start.