51Job Stock Forecast: Gone are the days when you printed dozens of resumes, customized cover letters, and mailed them off to addresses found in the “Help Wanted” section of the local newspaper. The job hunt has gone digital, both in the US and around the world.
HR professionals now rely on web-based tools to post open positions, collect information from candidates, and connect with top talent. In the US, top talent sites include LinkedIn, Monster, and Indeed.
In China, the biggest is 51Job [Nasdaq: JOBS]. This service boasts more than 100 million registered members.
Investors have been keeping a close eye on 51Job, and the company is often included on lists of promising Chinese stocks. However, 2020 hasn’t been kind to the world economy, and China has had a particularly difficult time.
That, coupled with concerns about potential changes in US regulations, has some questioning whether 51Job stock is a buy.
51Job = Online Job Postings In China
Online job postings and resume collection are just the tip of the iceberg when it comes to 51Job services.
The company has established itself as a leading provider of end-to-end talent acquisition and talent development services, from establishing relationships between job seekers and employers to on-going career development programs.
In addition, 51Job offers related human resources tools and services, such as compensation analysis, campus recruiting, HR research, business process outsourcing, and an executive search function.
The organization was founded in 1998, just four years after Monster.com transformed the job search experience in the United States.
In September 2004, 51Job held its IPO, and it has been listed on the Nasdaq ever since. Many consider 51Job a pioneer, as it was China’s very first publicly listed HR services company.
Today, users can access 51Jobs online or through mobile apps, and the company has 25 offices located throughout China. Its list of Chinese and international corporate clients is thousands long, and the figure is constantly growing. That makes 51Job the first stop for most job seekers in search of employment in China.
Will 51Job’s Competitors Beat It?
Of course, biggest isn’t always the best. A variety of competitors are hard at work on catching up to 51Job – and then pulling ahead. For example, Zhaopin Limited is an up-and-coming Chinese firm that offers a very similar suite of services as compared to 51Job.
Outside of China, the competition from international firms is even tougher. Companies like US-based Korn Ferry, UK-based Norman Broadbent, India-based Naukri Internet Services and Ireland-based Cpl Resources are all looking to make their mark in the Chinese market.
Will they succeed? For the moment, probably not. It doesn’t appear that there are any domestic or international firms that pose a strong risk to 51Job in the near future.
Currently, 51Job has the brand and reputation required to stay on top of the Chinese talent acquisition market.
Risks of Investing in 51Job
Those considering a new investment in 51Job stock face risks that simply weren’t present at the start of the year.
First, the company has suffered – along with many others around the world – in the wake of the novel coronavirus pandemic.
The primary challenge facing 51Job in the first quarter of 2020 was reduced demand for recruiting support. This occurred as a direct result of quarantine-related office closures, travel restrictions, an extended Chinese New Year holiday, and an overall reduction in economic activity.
Nonetheless, 51Job was able to adapt relatively quickly to the situation. The final quarterly revenue figures did reflect a loss, but it wasn’t as significant a loss as business leaders originally predicted.
Further, 51Job was able to turn a profit despite challenges, with non-GAAP earnings per share coming in better than expected.
A second risk facing current investors is the rumor of major changes in US trading regulations that apply to international businesses.
In mid-May, the US Senate passed the Holding Foreign Companies Accountable Act, which – if it becomes law – would require all foreign-owned companies to validate that they are not controlled or owned by a foreign government and to allow an American audit firm to review their financial records.
This requirement conflicts with Chinese laws already in place, so theoretically, the new regulation, if passed, could result in the delisting of Chinese companies from US exchanges.
Furthermore, unlike other delisted stocks, companies delisted as a result of this regulation could not be traded OTC. As a Chinese company, 51Jobs would be impacted, and shareholders would find themselves with stock that cannot be sold.
The mere possibility that this law will make it through Congress and obtain an executive signature forced 51Jobs share prices down 12 percent in two days. Many investors decided they simply couldn’t risk being stuck with shares that could potentially be unsellable.
Is 51Job Stock A Buy?
The risk inherent in a 51Job investment makes it an unsettling choice for most investors. Share prices have been quite volatile as compared to the larger market, even before concerns with coronavirus began.
When the market is strong, 51Job stock’s growth is enhanced, but when there is a drop, 51Job stock loses value more quickly than shares of companies in other industries.
While average investors typically prefer less volatile, less risky stocks, 51Job may present opportunity for day traders and options traders.
These experienced professionals aren’t looking for shares to buy and hold – they are focused on trades that take place minutes or hours apart. In that situation, volatility is an important element of turning a profit.
51Job Stock Forecast: The Bottom Line
The bottom line is that even though 51Job stock is available at discount prices, it’s not the right time for most investors to risk adding these shares to their portfolios.
However, full-time traders who can keep a close eye on small movements in specific stocks and the larger market throughout the day may realize rewards by including 51Job shares on their watch list.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.