Qihoo 360 Technology Co Ltd (QIHU), a player that entered the Chinese search market in August of 2012, is now capturing up to 20% of the country’s search market traffic, and QIHU is expected to see future growth in revenue from the service, says Echo He, Senior Vice President in equity research at Maxim Group.
“The major positive of this stock is that the company entered search market in August 2012, and in the first quarter of 2013 they started to generate revenues through this search service they provided. Although they’re a new company in search — but at the beginning, they were able to grab 10% of the search market traffic, and right now they’re somewhere between 15% to 20%, depending on which source you’re using. It’s making a progress, and seemingly the traffic to this new search service is still growing. As long as the traffic to this service is growing, it suggests the future revenue continue to grow,” He said.
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While the QIHU‘s revenue from search is not making a meaningful impact to the market dominant, Baidu Inc (ADR) (BIDU), He expects Qihoo‘s search traffic to grow, and therefore revenue to continue to grow as well, as the company has a solid model to capture users and user activities.
“Why do I think the company will likely get higher market share than the current level? The major factor is the company has a good way to grab users and user activities. They provided a free service; on top of the free service they added some other services, and they use that free service to make users use their added-on service. One of these added-on services is search,” He said.
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