Stock (Symbol) |
Weibo (WB) |
Stock Price |
$66 |
Sector |
| Technology |
Data is as of |
| July 1, 2017 |
Expected to Report |
| Aug 7 |
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. Source: Thomson Financial |
Sharek’s Take |
 Late last month China threatened to close Weibo’s (WB) video service due to political content being posted without a license. Weibo took the criticism seriously and said unlicensed content, as well as videos longer than 15 minutes, will be banned on the platform. Still, shares of the stock are lower on fears (and profit taking, as the stock’s up from $20 to $70 in less than two years). This situation is the only blemish on what is an otherwise perfect looking stock. Weibo, which is referred to as the Twitter of China, has been fundamentally perfect in my eyes. It’s delivering triple-digit profit growth, beating the street and upping estimates. Weibo was created by Chinese web company Sina in 2009, then spun off as an IPO in April 2014. Sina still owns a large portion of WB shares, as does Alibaba, which is a key advertiser for Weibo. WB is one of the fastest growing publicly traded companies in the world. Profits have gone from nothing in 2014 to $0.32 in 2015 and $0.82 last year. This year profits are expected to reach $1.51 with 2018’s estimate at $2.32 and 2019’s at $3.34. The video situation is serious to Weibo as videos are a big source of revenue growth, and the company is making easier creation and consumption of short videos a top priority for management this year. Weibo has an Estimated Long-Term Growth Rate of 50% a year, yet sells for a discount. Its P/E is 44 on 2017 profit estimates, which have jumped from $1.12 to $1.51 the past 4 qtrs. Now, if that’s the trend of estimates, isn’t it conceivable that WB could earn $2 this year? Maybe $4 next year? A P/E of 50 on $4 in profits would be a $200 stock. My Fair Value is 60x earnings (fair for a triple digit grower) which currently equates to $91 this year and $139 in 2018. WB is fundamentally the best stock I follow, and although this legislative disruption could cause rockiness this qtr, the stock still looks to be the best one I’m aware of. |
One Year Chart |
 Last qtr, profits were expected to climb 200% and the company delivered 271% growth. Sales jumped 67%. Qtrly Estimates for the next 4 qtrs are 125%, 71%, 41% and 42% and rising, so this trend looks to continue. The Est. LTG just fell from 64% to 50% Here’s my original research report done in 2015 Q1. Note the P/E was 42 then, and is 44 now. |
Fair Value |
 WB had a P/E of 72 in my 2016 Q3 report. So I feel the My Fair Value is 60x earnings which is $80 this year and $116 next year but estimates have increased the last 4 qtrs (2017 from $0.93 to $1.33) so I could be upping these profit figures in future qtrs. |
Bottom Line |
 Weibo is a top tier growth stock, the stock hasn’t been on a smooth ride higher. The trend has been for WB to base, then break out and go higher. It recently broke out at $60 and I feel the next move is higher. Also, My 2017 Fair Value is double the current price. I feel management is more than happy to comply with Chinese regulators, and although this might cause a blip in production, the company will stay on its growth trajectory. WB ranks 1st in the Growth Portfolio and Aggressive Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
1 of 30Aggressive Growth Portfolio 1 of 15Conservative Stock Portfolio N/A |
