Seeking Alpha
All posts from Seeking Alpha
Seeking Alpha in Seeking Alpha - Read, Decide, Invest.,

Weibo: We Have Hit An Inflection Point; Lowering Target Price To $9

The China Internet Network Information Center (CNNIC) reported (link in Chinese) that the number of microblog users in China saw an accelerated decline in 2014, down -11.4%, after declining -9% in 2013. At the end of 2014, microblog users account for 38.4% of China's total internet user base, compared with 45.5% in 2013. I view this headline as a negative to companies such as Weibo (WB) that derive almost all of their revenue from microblog advertising. Given that WB drives much of Sina's (SINA) advertising growth (i.e., Sina's core business is in a secular decline), I would view this news as a negative to SINA as well. That said, I reiterate my bearish view on both WB and SINA. Since my initiation on WB last year, the stock has been down -37% and trading below my $15 price target. My bear-case scenario assumes a +20% revenue CAGR on 24% OPM… Read More …