SINA – This Hot Chinese Internet Stock Just Got Even Hotter

by Jim Woods | November 13, 2013 1:02 pm

Sina Corp (SINA[1]) — the Chinese Internet stock superstar — sure is making me smile today.

sina stockWhen everyone knows you write about stocks for a living, you get the inevitable questions about whether you should buy a hot new IPO. That’s what happened last year when Facebook (FB[2]) went public. And that’s what’s happened again this year with Twitter (TWTR[3]). My response to the former was to wait until the stock stabilized, and then buy it.

As for the latter, my response is to ignore the real Twitter for now and buy the “Chinese Twitter — SINA.

Sina Stock Still Sizzling

In early Wednesday trading, SINA stock surged more than 13% after the company reported blowout Q3 earnings and revenue. The Chinese Internet portal and micro-blogging service said it saw an adjusted profit of $25.4 million, or 37 cents per share of SINA stock.

That metric was up big from the $9.9 million, or 14 cents a share, SINA saw in the same quarter a year ago. Excluding one-time items, Sina profits jumped to 42 cents a share from 17 cents. Analysts were expecting EPS of just 32 cents.

SINA stock also soared from a stellar showing on the revenue front, as the company said its top line had a 21% year-over-year surge to $184.6 million. Advertising revenue in the quarter vaulted 26% to $151.6 million, while non-advertising revenue climbed 4.1% to $33.1 million. The consensus forecast for SINA revenue in Q3 was $183 million.

Perhaps the biggest factor driving SINA stock forward was the company’s Q4 guidance, which called for revenue between $190 million and $194 million. That includes advertising revenues to be between $160 million and $162 million and non-advertising revenues to be between $30 million and $32 million. That metric easily beats Wall Street projections for Q4 SINA revenue of $182 to $187 million.

The expectations for Q4, along with the outstanding results for Q3, rightly have caused SINA stock to spike. Then again, big spikes higher are nothing new for China’s Twitter. In fact, SINA stock is up more than 70% year-to-date, and that’s despite the justified perception that China’s economic growth has hit a rough patch this year.

There’s been no rough patch when it comes to SINA stock, as Chinese citizens continue to embrace the company’s Weibo division.

Weibo’s partnership with what’s been called “China’s Facebook,” Alibaba, is working, as Weibo now accounts for about 30% of overall Sina sales. In fact, revenue from Weibo grew 128% year-over-year, and Alibaba was responsible for about 50% of that.

So, forget Twitter and Facebook. If you want real social media power, go to China and by SINA stock.

As of this writing, Jim Woods did not own any of the stocks mentioned here.

  1. SINA:
  2. FB:
  3. TWTR:

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