Regular readers of this blog know that I seldom talk about actual trades, I mentioned the reason for that in this post. Ironically the trade on Leucadia I spoke about ended up being my dumb trade of the month, talk about confirmation. So to invite disaster I thought I’d discuss what I’m currently up to, in case it’s not clear from my other musing.

KongZhong Corp. (KONG) has sold off since its Q3 earnings release falling almost 30%. So how bad were those earnings and guidance? It turns out both were reasonable.
Earnings beat estimates and revenues beat guidance. Forward guidance was good and management were refreshingly open on their Q3 conference call.
So why the large sell-off? KONG was heavily promoted by at least two newsletters and was a darling of the momo crowd. The shares were overvalued and stretched prior to the earnings release and only exceptional earnings and guidance on every front could have sustained the price.
Once the shares started to show weakness the momentum …

KongZhong Corp. (KONG) blew earnings estimates away and increased guidance for next quarter. They beat eps by 3 cents and revenue by $0.9M. Mobile games up 38%.
The following two graphs paint the KongZhong (KONG) picture. Mobile games are starting to be a significant contributor to the bottom line and WIS is growing into a valuable third string to their bow. At the same time gross and net margins continue to improve. KongZhong is a company firing on all cylinders.
The gross margins for mobile games was stable at a stonking 59%. Total mobile game revenues in 2Q09 were $6.8 mn, a 368% increase from the same period last year and a 38% increase from 1Q09. WVAS gross margins increased to 49% and WIS to 51%, up respectively 2% and 1% QoQ.

Kongzhong Corp. (KONG) keeps on climbing. I finds these valuation heights somewhat dizzying, but I’m sure enjoying the ride. Like exciting fair ground ride the trick is get off before you’re sick. I thought KONG had climbed high when it was at eight, at $10 I almost headed for the emergency exit, today KONG closed at 12.04.

KongZhong Corporation (NASDAQ:KONG) blew away analysts estimates when they reported after hours on Wednesday. Could this baby gorilla of the wireless market finally be growing up into a chest pounding 800lb gorilla?