Cheetah Mobile (NYSE: CMCM) stock plunged to a record low of $3.43 on Thursday as investors remained concerned about the Chinese mobile internet firm’s future. The company faces certain challenges in growing revenue in the near-term as well as the plan to increase its investments in artificial intelligence could hurt the profitability in the near-term.
The company’s overseas business has been experiencing difficulties due to the recent global business environment as well as misleading statements on its business. This had made considerable damage including a pause in collaboration with certain business partners in the international market.
Cheetah Mobile is expected to take a few measures in the second half of 2019 for generating profit and cash flow from the utility product business and mobile entertainment business. The company plans to implement cost control, streamline and refine product lines, and dedicate more focus on AI business, which is still in the early stage of development.
The main challenge that the company faces is its AI business showing meaningful revenue contribution. Investors also fear that the company will need more time in taking revenue contribution from AI business. Meanwhile, market analysts have remained on the sidelines and suggested a “hold” rating on the stock.
The company’s utility products include Clean Master, Security Master, Battery Doctor, Cheetah web Browser, CM mobile Browser, CM Launcher, Cheetah Keyboard, Photo Grid, CM Locker, Duba Anti-virus, and SafeWallet. Also, the company offers Live.me, a live video streaming application; and Cheez, an interactive short video application. The products also include Cheetah Voicepod, Cheetah portable Translator, and Cheetah reception robot GreetBot.
For the first quarter, the company reported a 90% dip in earnings as disruptions to the overseas mobile utility business hurt revenues by 5%. Revenues from the mobile entertainment business grew by 42% driven by the growth of both mobile games business and LiveMe business.
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The company benefited from mobile games such as Bricks n Balls, Piano Tiles 2, Rolling Sky, and Dancing Line. In the first quarter of 2019, we also launched a number of casual games, which also contributed to the revenue growth, although their aggregate revenue contributions were still insignificant.
Shares of Cheetah Mobile opened lower on Thursday but changed course to the green territory on the NYSE. The stock has fallen over 66% in the past year and over 44% in the past three months.
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