Xunlei Limited (XNET) operates an internet platform in China based on cloud computing. Lately, XNET stock is on a tear. It provides users with quick and easy access to digital media content through its core products and services, Xunlei Accelerator and the cloud acceleration subscription services. The Company offers services such as cloud-based subscription services, online advertising, online games, software licensing, and content distribution. Xunlei Limited is based in Shenzhen, the People’s Republic of China. We have some concerns over XNET stock:

 

Key fundamentals and technicals to be aware of

  • XNET stock is above its 20, 50 and 100 day moving averages
  • 12 new highs and up 212% in the last month
  • Relative Strength Index 81.25%
  • XNET stock technical support level at 14.16

Fundamental factors:

  • Market Cap $1.0235 billion
  • No major Wall Street firms are making projections on the stock
  • Earnings have moved higher

Key earnings data

Third Quarter 2017 Financial Highlights:

  • Total revenues were US$47.3 million, an 15.6% increase from the corresponding period of last year and up 14.0% from the previous quarter.
  • Online advertising revenues (revenues primarily from mobile advertising) were US$5.7 million, a 22.9% increase from the corresponding period of last year and a 9.7% increase from the previous quarter.
  • Other internet value-added services (“IVAS”) revenues were US$20.8 million, a 64.9% increase from the corresponding period of last year and a 32.4% increase from the previous quarter. IVAS consists of cloud computing and services other than subscription and advertising.

Risk

It ilikely that over the next quarter or two, XNET cash position will continue to deteriorate as it continues to sell OneCloud devices at a loss. It will then assume further liabilities as end-users expect to receive payments in OneCloud coins or Yuan. Let us not forget that China has banned ICO of cryptocurrency. XNET could get around this by dealing only in Yuan, but that would limit the attractiveness.

Our Take on XNET Stock

So how do we view XNET stock? We think there is no fundamental reason for shares to be rising at the levels we are seeing. Take profits in XNET stock while you have them.

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