Stock (Symbol) |
Weibo (WB) |
Stock Price |
$49 |
Sector |
| Technology |
Data is as of |
| Sept 8, 2016 |
Expected to Report |
| Nov 4 – 8 |
Company Description |
 Weibo Corporation is a social media platform for people to create, distribute and discover Chinese-language content. The Company provides ways for people and organizations to publicly express themselves in real time, interact with others on a global platform and stay connected with the world. It operates in two segments: advertising and marketing services and other services. It offers self-expression products that enable its users to express themselves on its platform; social products to promote social interaction between users on its platform; discovery products to help users discover content on its platform, and notifications to notify users on Weibo account activities through short message service (SMS) or push notification on their device. It offers advertising and marketing solutions to enable its customers to promote their brands and conduct marketing activities. Source: Thomson Financial |
Sharek’s Take |
 Shares of Weibo (WB) are on a parabolic run as profits have been compounding each qtr. Weibo, which is referred to as the Twitter of China, was created by Chinese web company Sina in 2009, then spun off as an IPO in April 2014. Sina still owns around 50% of WB shares, and Weibo advertiser Alibaba holds a stake in WB as well. Last qtr WB clocked in with a $0.16 profit vs. $0.05 a year ago, and beat analyst estimates by a whopping 6 cents. Afterwards, Annual Profit Estimates and qtrly profit estimates jumped — as did the stock. Less than six months ago this was a $20 stock and now it hovers around $50. But what’s concerning to me is (A) WB has a P/E of 72 (up from 53 last qtr) and (B) the stock’s gone on a parabolic run and I fear a correction could whipe out some of these gains. Still, there’s lots of room for growth in not only number of users (which jumped 34% in 2015) but also in revenue per user, which is far below Twitter’s. Since I have big gains in the stock, I have been selling between 25% and 33% of my position to create cash and lower my risk. |
One Year Chart |
 Profits have been growing exponentially the last 4 qtrs, and that’s expected to continue as analyst estimate 100%, 60%, 129% and 38% growth the next 4 qtrs. The Estimated Long-Term Growth Rate of 76% might be the highest of any stock I follow, but comes with a 72 P/E which is rich (but not too high). |
Fair Value |
 I’m taking my Fair Value from 45x earnings to 60x. That gives the stock a current Fair Value of $41, with a 2017 Fair Value of $67. But who knows what the P/E should really be. 75? Annual Profit Estimates for 2016/2017/2018 just jumped from $0.55, $0.93, $1.43 to $0.68, $1.12 and $1.69. This stock fits the mold in so many ways. At this rate the company could make $2 next year, and a 60 P/E would make it a $120 stock. |
Bottom Line |
 Before you load up on Weibo, notice the stock has gone parabolic in its ten-year chart. This is a dangerous pattern that might result in the stock going through a deep correction if investors take profits. But on the other hand the stock could be on its way to $100 long-term. WB ranks 5th in the Growth Portfolio Power Rankings and Aggressive Growth Portfolio Power Rankings. I’ve been selling shares as I bought clients in at $21 when the stock broke out earlier this year. |
Power Rankings |
Growth Stock Portfolio
5 of 37Aggressive Growth Portfolio 5 of 16Conservative Stock Portfolio N/A |
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