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Bitauto Shares Soar After Partnership Announcement

Bitauto HoldingsBitauto Holdings Ltd (NASDAQ: BITA) stock climbed 7.25% to $89.68 per share on heavy volume, touching a new high of $ 95.00 before pulling back  after the company announced a  partnership with JD.com (NASDAQ: JD) and Tencent.

Combined, the companies will invest $1.3 billion in cash and resources to help advance China’s top automotive e-commerce platform and another $250 million in Bitauto’s YiXin Capital.

At midday trading volume has surged 567% above normal trading volume with 2.2 million shares trading hands. Bitauto Holdings Ltd (NASDAQ: BITA) is trading to a PE  of 54.

JD.com (NASDAQ: JD)  will invest $400 million in cash directly but also provide $750 million in resources to include sole access to the used and new car channels found on the e-commerce site JD.com. In exchange for shares, additional support from primary platforms, as well as mobile applications are also included. For Tencent, $150 million in cash is being provided. Then JD and Tencent combined will invest $100 million and $150 million respectively in YiXin Capital.

As part of the deal, JD will take control of 25% stake in Bitauto while Tencent takes only 3.3%. In YiXin Capital, JD will have 17.7% and Tencent 26.6%. Currently, Tencent maintains a significant stake in JD. Bitauto, with shares soaring, agrees to aggressively invest as a means of solidifying the company’s leadership and to help build market share.

Along with beating estimates for third quarter results, Bitauto is now guiding revenue for the fourth quarter of $117.3 to $120.6 million, more than the consensus of $110.1 million. For net profit, experts anticipate this rising 52.9% to 62.6% year-to-year, hitting between $25.7 million and $27.4 million. Year-to-year growth was also seen by both Bitauto.com advertising and EP platform. Regarding gross margin, this was 80.3% flat quarter-to-quarter, up from last year at the same time from 74.4%.

Bitauto Holdings Limited provides marketing and internet content services specifically for the automotive primarily throughout the People’s Republic of China. There are four segments of the company to include Bitauto.com Advertising Business, EP Platform Business, taoche.com Business, and Digital Marketing Solutions Business.

Bitauto.com offers advertising services such as promotional information, reviews, specifications, pricing, and consumer feedback for new automobiles. The EP Platform provides web-based customer relationship management applications and integrated digital marketing to China’s automobile dealers.

Then for taoche.com, listing services for used automobiles are offered to dealers but also advertising services for dealers and automakers. The last segment, Digital Marketing Solutions offers one-stop solutions that includes creation and maintenance of websites, online marketing campaigns and public relations, and services for advertising agents.

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