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Weibo Corp (ADR) (NASDAQ:WB) isn’t always the first company that Americans think of when they think of the online juggernauts in China. But they should.
Usually in American press, WB is said to be “the Twitter Inc (NYSE:TWTR) of China.” It isn’t. It’s the Facebook Inc (NASDAQ:FB) of China.
What’s more, WB has substantial partners where FB has competitors.
WB was spun out of major online media company SINA Corp (NASDAQ:SINA), which still has a large share in Weibo. SINA currently has a 46% ownership share and 72% voting rights share.
Many use the lower-priced and smaller-market-cap SINA as a proxy for Weibo stock with less premium. The problem with that is, activist investors are adding increasing pressure for SINA to drop its control of WB and put the money to better uses on its own.
Like Yahoo! and its 15% ownership stake in BABA stock, SINA’s WB position may be its only redeeming quality.
As WB grew and its potential was becoming clearer, major online player Alibaba Group Holding Ltd (NYSE:BABA) also got involved, and took a large stake — 31.5% — in WB.
With more than 77% of the stock split between its two Chinese online players, it may not seem like WB has much room to maneuver. But the opposite is true.
WB’s relationship with BABA in particular has enormous benefits and is likely a key part of WB stock and the business’ continued spectacular growth.
Imagine if Amazon.com, Inc. (NASDAQ:AMZN) bought FB. The potential for cross-pollinating those businesses would be enormous.
That is precisely what the WB/BABA link is. As Asia’s premier online retailer and wholesaler (as well as so much more) BABA can use WB’s growing social media network to expanding its marketing and reach to younger generations in new market sectors. And WB benefits from expanding marketing and advertising revenue that it can then sink into new growth opportunities and new technologies.
This virtuous circle is just beginning to get traction, especially as the global economy regains its footing.
Weibo Stock Still Forging Forward
And WB stock’s most recent numbers bear this out once again.
In mid-February, just days after the U.S. market nose-dived, WB released its Q4 and fiscal year 2018 numbers. They were stunning, as usual.
Its user base continues to expand at breakneck speed. Monthly active users were up another 79 million to 392 million, with 93% mobile users. Daily active users were up 33 million to 172 million.
And WB is monetizing that growth.
For the quarter, net revenue was up 77%. Net income attributable to Weibo was up 205%. Adjusted EBITDA were up 107%. For the year, it was a similarly impressive story.
FY revenue was up 75%. Advertising and marketing revenues were also up 75%. Value added service revenue was up 81%. Net income attributable to Weibo was up 121%. Adjusted EBITDA grew 143%.
Up 33% year to date, tariff talk in China may rattle WB stock slightly but its growth is assured.
— Louis Navellier