To The Moon

$Zhihu(ZH)$ is scheduled to release its earnings report on 24 May 23 premarket. This stock have been flat below going down below $1 and begin its descent.

Will their earnings report try to revive this stock?

Last quarter Guidance

Moving into 2023, they will continue to stimulate user experience across their community, empower their multiple growth engines and further enhance their technical capabilities to embrace long-term growth opportunities.

But this does not seem to sit well with investors as the share price have been falling since.

On April 13, Zhihu, a Chinese Q&A community, announced the release of “Zhihaitu AI”, a large-scale model co-trained with Model Best, one of China’s leading model makers.

Additionally, Zhihu has invested in Model Best to further strengthen their partnership.

This might help them for future growth into 2023. I would expect to see more news on this in Q1 2023 guidance (if there is any).

No Debt on its balance sheet

I think we need to focus not on high forecast growth rate as they are still undergoing investment period.

Something positive that we might want to take note is Zhihu(ZH) has no debt on its balance sheet. This is considered rare for a loss-making growth company, which typically will have high debt relative to its equity.

This would mean that the company has been operating purely on its equity investment and has no debt burden.

This alone would reduce the risk if I were to invest in the current loss-making company.

Zhihu(ZH) Earnings Forecast

The estimate for Zhihu(ZH) Q1 2023 is -$0.06 with a range of -$0.06 to -$0.06. The Q4 2022 EPS was -$0.08. ZH beat its EPS estimate 100.00% of the time in the past 12 months, while its overall industry beat the EPS estimate 62.46% of the time in the same period.

Zhihu(ZH) has Outperformed its overall industry.

Zhihu(ZH) Sales Forecast

Zhihu(ZH) has set their sales forecast to be $138.71M with a range of $137M to $140M. Q4 2022’s sales results were $156.54M.

Zhihu(ZH) beat its sales estimates 75.00% of the time in past 12 months, while its overall industry beat sales estimates 63.66% of the time in the same period.

Zhihu(ZH) Price Forecast

Zhihu(ZH) average price target is $2.25 which is 139.5% above the last traded price of $0.9393.

We would need a positive EPS and profit showing for Zhihu(ZH) to reach that price target.

Zhihu(ZH) Hedge Funds Holdings

As we mentioned earlier, Zhihu(ZH) is still in investment attracting period. So it is important to note that hedge funds are still investing in them

There is an increase of 303.2K Shares Last Quarter by hedge funds.

Zhihu(ZH) Price Change before and after Earnings

There seem to be positive increase in prices before and after the earnings, the last quarter earnings reported that they missed EPS by slight margin, but market still are positive with its prices.

I am hoping to see a larger margin when there is positive EPS reported.

Zhihu(ZH) Technical Analysis - Moving Averages

I can understand why the signal is a Sell as Zhihu(ZH) has fallen below $1, which might make the stocks very unattractive.

But I would like to look into some of the other metrics as well (e.g. Average monthly active users (MAUs), Average monthly subscribing members)

Zhihu’s (ZH) 10-Day exponential moving average is 1.03, while Zhihu’s (ZH) share price is $0.939, making it a Sell.

Zhihu’s (ZH) 100-Day exponential moving average is 1.29, while Zhihu’s (ZH) share price is $0.939, making it a Sell.

Zhihu’s (ZH) stock price is $0.939 and Zhihu’s (ZH) 50-day simple moving average is 1.20, creating a Sell signal.

Zhihu’s (ZH) stock price is $0.939 and Zhihu’s (ZH) 100-day simple moving average is 1.41, creating a Sell signal.

Zhihu’s (ZH) stock price is $0.939 and Zhihu’s (ZH) 200-day simple moving average is 1.30, creating a Sell signal.

Summary

I do see potential in this stock (Zhihu(ZH)), as firstly they have no debt and they have been depending on the investment equity to generate revenue(which is considered to be quite significant().

No debt mean they will not have to worry about the cost of debt. What I would look out for in the next earnings report (Q1 2023) is their Average monthly active users (MAUs) and Average monthly subscribing members.

I believe these 2 numbers should increase, hence, will improve their revenues.

I will be watching the price and volume traded closely on 23 May 2023 to see how investors feel about this stock.

Appreciate if you could share your thoughts in the comment section if you will be looking at trading Zhihu(ZH).

Do like, share and comment on this article if you find this trading thought useful.

@TigerStars appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.