Although the global financial markets have suffered a comprehensive bloodbath in the past two days, some assets have still grown against the trend. Sohu's performance is still relatively strong. According to Futu statistics, Sohu rebounded rapidly after opening significantly lower yesterday and finally rose 1.31%.

(Source: Futu)

Restarting growth in performance and continuing to buy back shows confidence.

The reason why Sohu is still relatively strong is mainly because it has just handed in a satisfactory answer for now.

According to the Q2 2024 financial report released by Sohu, the company achieved a total revenue of 0.172 billion US dollars this quarter, a year-on-year increase of 13%, a quarter-on-quarter increase of 24%, and achieved an unexpected growth. Among them, brand advertising revenue was 20 million US dollars, which is still declining year-on-year, but quarter-on-quarter growth of 24%, which is at a high position expected before; online game business revenue was 0.147 billion US dollars, a year-on-year increase of 24%, and a quarter-on-quarter increase of 25%, exceeding the previous expectations.

Obviously, the growth of Sohu again has undoubtedly given the market hope and given investors some confidence.

Although Sohu is still a net loss this quarter, it is mostly strategic losses due to increased forward-looking investments, such as expanding platform size and user acquisition, exchanging short-term profits for long-term share and seeking greater value.

It is worth mentioning that Jefferies Financial raised Sohu's target price from $13.9 to $15.2 immediately after Sohu's quarterly report was released.

How much is a company worth? There are few people who know this better than the company's management. The management of Sohu naturally knows that the company's value is underestimated, so it launched a buyback at the time of last year's 'low point', and further increased the planned total amount of buybacks to a maximum of $0.15 billion in March of this year.

Emphasize the management's continued confidence in the company's long-term growth prospects. As of August 1, 2024, the company has repurchased approximately 2.35 million ADS shares, costing approximately $26 million.

It seems that the management of Sohu is clearly more confident in the future of the company. The quarterly report is not only a self-verification, but also a positive turning point.

Multi-line cooperation blooms together, and the layout of differentiated social interaction can be expected.

In short, games are now Sohu's 'cash cows', media is the foundation, and video is the future. From the perspective of business models, Sohu will mainly continue to move forward with 'two legs' of advertising and membership. With the continuous enrichment of Sohu's content ecology and the continuous improvement of the user experience, the commercial value of Sohu will inevitably be 'rising tide.'

After continuous investment and exploration and layout, Sohu's growth 'roadmap' is becoming clearer and clearer, mainly the following two lines.

First, keep the stock. It is understood that businesses such as text, news and media will take into account both 'volume' and 'quality', maintain the vitality of Sohu News content, and continue to drive it with the underlying logic of '1.0 distribution + 2.0 social + AI application'. Among them, the 'timeline' function newly launched in Sohu News APP is another tough trick for Sohu in interactive social networking.

At the same time, 'activity is content' has always been the operating philosophy that Sohu has adhered to. Over the years, the original activity IPs created by the company are visible, including 'Sohu News Marathon,' 'Sohu Technology Forum,' 'Sohu Finance Forum,' 'Sohu Wine Industry Forum,' 'Sohu Fashion Festival,' etc., which not only enrich the content pool but also improve Users' participation and social interaction on the platform, thereby locking in more advertisers' budgets.

Among them, the 'Sohu News Marathon' has held sixteen sessions so far. It is no longer just an IP and symbol, but more like a 'microcosm', recording the changes in the industry and Sohu's iteration. In addition, Sohu is also constantly innovating content marketing activities, such as live interview programs 'BOSS1+1,' Youth Curtain Plan-Sohu Youth Image Creator Grand Prix, etc.

Second, explore increment. Video social and knowledge live broadcast are obviously the main battlefield.

This year, short video social networking is a major breakthrough for Sohu Video. The new 'follow flow' on the Sohu Video APP is a video 'social field' that has grown out of it, which complements and interacts with the 'timeline'.

It is understood that users can forward, follow, and consume in the 'follow flow', and social interaction will be generated. According to analysts in the industry, compared with algorithm-dominated short video platforms, Sohu Video APP 'follow flow' values ​​fan stickiness more and pays more attention to content quality, opening up a new path for promoting high-quality content output. To quote Zhang Chaoyang, 'Follow Flow' is dealing with people.'

This season, Sohu Video has organized various online and offline activities to develop influential online fan communities in different verticals. For example, the '2024 Sohu Video Dance Master Class' has attracted a lot of attention and recognition from K-POP fans nationwide. Next, the '2024 Sohu Video Dance Flip Contest' will be launched in early August. In addition, various activities related to Chinese traditional 'Hanfu' and photography have also been held, which have gained significant traffic and high recognition.

The 'Follow Stream' of the Sohu Video app has created a sophisticated and vertical platform around PGC, UGC, and Vlog self-media short videos, forming an interesting, useful, and visually appealing content ecosystem. From the perspective of content logic, it is the cornerstone of active user acquisition and the source of traffic and market opportunities. Capital trust comes from scale. Where there is traffic, there is a market, which means that once the business model of the 'Follow Stream' is successful, there will be limitless possibilities.

Sohu is also continuing to invest in self-produced content by purchasing exclusive dramas, launching unique original content, and introducing short dramas to enrich its existing library. For example, the self-produced drama 'Towards You in All Time and Space' and the Olympic-themed reality show 'Like a Champion' have both been well-received by audiences and have sparked extensive discussions on various social media platforms.

Sohu Video has also performed well in the field of knowledge live streaming.

Since officially entering the market in 2019, live streaming has covered eleven popular sectors and has produced explosive hits. The knowledge live streaming content ecosystem is extremely rich, covering various fields with content such as 'Astronomy and Physics Lecture Hall,' 'Current Affairs Briefing,' 'Medicine, Health and Exercise,' 'Entertainment Awards Gathering,' 'Science Research and Application,' 'Museum and Natural Science Popularization Bureau,' 'Jurisprudence and Emotional Therapy Room,' 'Twelve Hours of Cultural History,' 'Popular Live Streaming Institutions,' and 'Essential Courses for Baby Growth.' It also has benchmark IP programs such as 'Zhang Chaoyang's Physics Class' and 'Science Speech Bureau.'

It is not difficult to imagine that with the continuous popularity of various Sohu IP activities and the discussions and spread on multiple platforms, it can not only gain recognition from more advertisers but also further consolidate and enhance Sohu's influence and discourse power as a mainstream media.

Sohu's incremental business grows out of its stock business, and the two complement each other. As incremental business often requires a period of 'accumulation' to extract and store more energy before it can break out. Therefore, Sohu's growth potential has not been fully released yet. Fortunately, it has now ushered in a good beginning.