Has YOU On Demand Run Too Much, or Not Enough?

By Jon C. Ogg Published Feb 2, 11:50AM EST

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YOU On Demand Holdings Inc. (NASDAQ: YOD) may not be a household name at all. Still, what happens when investors see that the video on demand service provider in China is up over 30% in a day?

YOU On Demand saw its shares surge on Monday based on news that it has entered into a licensing agreement with Twentieth Century Fox Television Distribution for the subscription video on demand (SVOD) rights in China to a broad selection of library feature films.

Monday’s press release shows that the film titles will be available to subscribers of YOU On Demand’s SVOD platform and service. They will also be made available via mobile, over-the-top, digital cable and Internet Protocol television (IPTV).

Some of the movies that will be available to YOU On Demand customers include recent worldwide box office hits and award winners such as: “The A-Team,” starring Bradley Cooper and Liam Neeson; “Black Swan,” starring Academy Award–winner Natalie Portman; 10-time Academy Award–nominated film, “Master and Commander,” starring Russell Crowe; “Speed,” starring Sandra Bullock and Keanu Reeves; and “Unstoppable,” starring Denzel Washington and Chris Pine.

YOU On Demand shares were up 32% at $2.71 in late morning trading on Monday. The question investors will ask is if this is too much of a run or not enough.

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It turns out that YOU On Demand’s market cap is in the micro-cap sector at $65 million or so. That is even after the pop, so YOU On Demand was worth just under $50 million prior to the news.

Another consideration is that no financial terms were mentioned. YOU On Demand’s press release also said that the company already has content distribution agreements in place with Disney Media Distribution, Paramount Pictures, NBCUniversal, Twentieth Century Fox Television Distribution, Miramax Films, Lionsgate and Magnolia Pictures. It also has content distribution agreements with Chinese filmmakers and governmental partnerships and approvals.

So, does the addition of one more media powerhouse account for a gain of better than 30%? Keep in mind also that YOU On Demand generated only $966,000 in total revenues in the first three quarters of the calendar year of 2014.

This $2.71 stock price compares to a 52-week range of $1.61 to $7.35. We had also seen over 11.8 million shares trade hands by approaching the noon hour, and the average daily volume is only 810,000 shares for a full day.

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About the Author Jon C. Ogg →

Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.