fbpx

Weibo Still Looks Amazing to Me

Stock (Symbol)

Weibo (WB)

Stock Price

$100

Sector
Technology
Data is as of
September 21 2017
Expected to Report
Nov 20
Company Description
weibo_logoWeibo 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
David SharekWeibo, which is referred to as the Twitter of China, has been fundamentally perfect in my eyes for quite a while now. 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. WB is fundamentally the best stock I follow. It’s been delivered triple-digit profit growth, beating the street, and upping estimates. Below is WB’s performance the last 4 qtrs, with profit growth, what estimates for that qtr used to be, followed by 2017, 2018 and 2019 profit estimates: 

  • 4QtrsAgo: 140% (was 50%) $1.26 $1.82 N/A
  • 3QtrsAgo: 127% (was 46%) $1.33 $1.93 $2.78
  • 2QtrsAgo: 271% (was 100%) $1.51 $2.32 $3.34
  • Last Qtr: 138% (was 38%) $1.63 $2.54 $3.61

Weibo is making easier creation and consumption of short videos a top priority for management this year — and it’s paying off big time! Video is driving Weibo’s growth, with video views up 90% just since last qtr, and up 159% year-over-year. “More and more TV variety shows (+381 yoy), TV dramas (+490%), online series and sports programs are choosing Weibo as the preferred social platform to distribute their IP content and engage with their fans” — Weibo’s CEO. The NBA has developed a strong following on Weibo. Short videos of games were viewed 8.4 billion times last year — and the new season has just begun. Although WB is up almost five-fold since I first purchased it — and it fairly valued now — my Fair Value for next year is $152, more than a 50% gain from here. Additionally, if WB continues to beat the street and up estimates this figure might prove to be conservative. Don’t be surprised if the stock goes to $200 next year.

One Year Chart
Last qtr Weibo delivered 72% sales growth, with mobile ad revenue up 85% as ad budgets shift to mobile. Qtrly Estimates for the next 4 qtrs are 88%, 56%, 69% and 53% and rising. The Est. LTG os 54% is outstanding, and the stock is worth a P/E of 61 with this type of growth.
Fair Value
My Fair Value on WB is 60x earnings. With the P/E now 61 I feel the stock is fully valued at this point. But I do expect the company to beat the street next qtr, up estimates, and rise past $100. My 2018 Fair Value of $152 is likely conservative as well. 
Bottom Line
Weibo is a top tier growth stock, and although it’s extended at this time, it still has excellent potential into 2018 and beyond. Fundamentally WB is the best stock I follow, but I do feel Alibaba is my top selection at this time as it’s larger and more stable (with a lower P/E ratio). WB ranks 2nd in the Growth Portfolio and Aggressive Growth Portfolio Power Rankings.
Power Rankings
Growth Stock Portfolio

2 of 34

Aggressive Growth Portfolio

2 of 15

Conservative Stock Portfolio

N/A

Not a member? Sign up here for $25 a month.