Is Youdao A Solid Long Term Investment?


The internet has various features, and among its essential components is the search engine. A search engine is a software system that conducts internet searches to locate images, web pages, and videos on the online domain. When talking of search engines, the most popular is Google, though there are others such as Youdao-a Chinese based engine. Generally, the company is decently performing in the Chinese financial markets. As an investor, one of the worthy areas you can put your funds into is in financial markets. Youdao has its stocks listed in the New York Stock Exchange market, which gives you a hint of how good its performance is. As the financial trading sector is growing, you need to look at it keenly, more so if you want to amplify your funds. It leads us to the question of whether Youdao is a solid long term investment. To answer this question, we will look at some important factors to consider.

The Current State Of China

In the last few years, China has been one of the best performing economies hence one of the best fields for investors to venture in. It has achieved massive strides in the technological sector, and Youdao is an evidence of the growth in telecommunications.

According to China’s economic growth Wikipedia page, it is a market-oriented economy and the second largest in terms of GDP worldwide. When focusing on the market orientation part, you get the picture that service industries will prevail in such an economy. The telecommunications sector leans more on the service industry, and with the search engine, you are sure of a significant market reach. The broad market base that the search engine has in its possession ensures that its stocks will mostly register impressive performances. The projected market growth is one factor to look at when long term investments are your goal. The market will hardly stagnate, and if you invest, you are sure that your initial funds will grow.

The Schools’ Recess

At the moment, schools in china are in recess, and this means that many students are at home. Since the younger population is tech-savvy, use of Youdao is expected to increase over the period. The extensive use of the search engine means its market will grow extensively, making it an excellent front to invest. According to the Motley Fool, the school recess situation had an effect of pushing its prices on an 80% high volume. Analyze such a performance, and you get a clear hint on the bearing to take for your long-term investment plans.

The Corona Virus Dilemma

One of the factors behind the school recession is the corona virus outbreak, which is among the most severe epidemics in this age. The disease has claimed lots of lives, and its presence has had devastating effects on the economy with a risk of the situation getting out of hand, according to CNN.

The situation creates a tense environment that shuns many investors away. The result is that many industries will face a bear market run if the disease continues to prevail. As an investor, you look at investing in Youdao at a broader aspect as many possibilities can come to play.

Should the Chinese financial sector face a possible bear run, short selling where you can gain from dwindling stocks. Still focusing on the corona virus situation, new stimulus measures present a recovery possibility with the dwindling stocks facing a comeback situation. With this picture in mind, a long-term investment opportunity can go through. As a smart investor, you need to take advantage of the low stock prices presently and buy a decent number of shares. In future, when the prices appreciate, you can expect impressive returns.

The China- United States Technological War

Another factor to look at to see if Youdao is an excellent long term investment plan is the technological war between the United States and China. The conflict focuses on the market share of each of the countries, where telecommunication services are the main point of focus. The situation escalated sometime in mid-2019 with the infamous 5G technology adaptation circumstances that led to restrictions against the Chinese telecommunication giant, Huawei.

The restriction led to Huawei pulling out of the USA market and is planning to shift its offices to Canada. The duel can spell various pathways for Youdao as many Chinese opt for their homegrown web software system rather than those from their competitor’s country. You also need to note that Google pulled out of the Chinese market due to censorship issues.

The trade war between these two giant global economies presents a volatile situation when it comes to the stocks of the search engine. China has a considerable population, and when Google pulled out of its market, it left a large market base that had the native web software systems to turn to. With a large clientele base, the company will surely perform well and is a good option should you want a long investment stint with its shares.

Bottom line…

Youdao is a Chinese search engine and a subsidiary of NetEase – an internet technology company. It is evidence of the massive strides that the Far East nation is making in terms of technological development. As earlier hinted, the Chinese economy is one of the best performing, and many of its companies’ stocks are registering a decent performance. If you are an investor with long term investment goals, one of the companies to look at is Youdao.

At the moment, it has a good standing at the major financial markets such as the New York Stock Exchange. It presents an excellent front to put your funds with promising earnings after a lengthy trading stint. Above are some of the factors to consider if you want to invest in this company’s stock. Carefully analyze each of them to enable you make an informed decision.

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