According to a new report, Pacific Crest is as bullish as ever on Chinese mega-cap Internet stocks following their recent weakness.

Analyst Cheng Cheng explains that Pacific Crest sees the weakness as only temporary and believes that traders should view it as a buying opportunity.

Fundamentals

Chinese Internet stocks reported mostly solid Q1 results, but issued mixed Q2 guidance. Cheng points out that aggressive spending remains one of the key issues with many Chinese internet names. Companies are throwing cash at user acquisitions, mobile transitions, and adjacent market opportunities.

As a result, the valuations of many companies have suffered, and investors are forced to be extremely patient and trusting as the companies continue to build their businesses.

SMID Consolidation

Among small- and mid-cap (SMID) companies, consolidation and potential consolidation has been…

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