Why Weibo Corp (ADR) Stock Is Crushing Twitter Inc (TWTR)

The so-called Twitter of China is doing much better than its U.S. clone

One would think a clone of Twitter Inc (NYSE:TWTR) would be a failure just as much as the well-known microblogging has been. As it turns out, though, microblogging is quite the hit … in China. Weibo Corp (ADR) (NASDAQ:WB) — partially owned by Sina Corp (NASDAQ:SINA) — is all the rage with consumers there, and as such is a favorite among the country’s advertisers.

Why Weibo Corp (ADR) Stock Is Crushing Twitter Inc (TWTR)More important (and in contrast with TWTR), Weibo stock has been plenty rewarding this year. While Twitter shares are down 18% year-to-date and have fallen 75% from their late-2013 peak, WB is up 127% for the year so far.

And that’s with a 21% pullback from last month’s high.

What’s Weibo?

For the unfamiliar, the most efficient way of describing Weibo is comparing it to Twitter. Like Twitter, Weibo has (or had) a 140-character limit for each post. That’s since been lifted, but only the first 140 characters are displayed to keep a Weibo page’s look and feel punchy, and to the point.

Beyond that fundamental commonality, though, WB starts to differentiate itself from its mirror image Twitter, which has focused its growth effort in the Western Hemisphere.

The biggie? As tired as the comparison between Twitter and Facebook Inc (NASDAQ:FB) has become, Weibo is “sticky” because it’s more like Facebook than Twitter is. Pictures, video and emoticons are all things easily added to a Weibo post that make it a much more engaging platform. It also has more templates to choose from, so users can create a more customized look to their page.

Weibo also does a better job than Twitter at facilitating conversations than Twitter does.

Perhaps more than anything. though, the idea of microblogging resonates with Chinese users more than it does with U.S. and other western users.

While the world is one giant global community now, cultural differences remain. Asian consumers think and behave differently than their counterparts on the other side of the globe. As much as Americans are glued to their phones, people in China are more apt to rely on their phone, and use it as a tool to do so much more including sharing things with friends … and non-friends.

Why Weibo Stock Has Outpaced Twitter

And there’s little doubt that the small user differences are driving a significant differences in the two companies’ numbers.

In its most recently reported quarter, Twitter grew its count of monthly active users (MAUs) by only 3%, to 317 million, while Weibo’s MAU grew 33% to 282 million. Both growth figures have been roughly the norm for each company for a few quarters now.

Revenue growth has been similarly different. Twitter’s top line was up 8% last quarter, versus a 36% growth pace for Weibo’s top line in its most recent reported quarter. Those growth paces have also been about the norm for both companies of late.

Perhaps the biggest reason WB stock has been such a red hot performer of late, though?

Weibo is profitable. Twitter isn’t.

Sure, TWTR reported an operating profit of 13 cents per share last quarter. But its operating income hardly tells the whole story. When all the bills were paid, Twitter lost $102.9 million. Weibo earned $7.1 million in its second quarter of the year, logging a fourth straight quarter of real GAAP profits.

Looking Ahead for Weibo Stock

By the way, Weibo reports its third-quarter results after today’s (Monday’s) closing bell rings. Analysts expect more of the same kind of red-hot growth. As of the latest look, the company is expected to post earnings of 20 cents per share on revenue of $173.07 million.

That bottom line would double the 10-cent profit per share of WB stock reported in the same quarter a year earlier, when it drove $124.73 million in sales.

Those same pros are looking for similar growth rates all the way through 2017, too. And barring something surprising and/or unusual coming out with this afternoon’s third quarter report and conference call, there’s no reason to think it won’t be able to meet those lofty projections.

Weibo stock may well be one of the market’s best-kept secrets.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2016/11/why-weibo-corp-adr-stock-crushing-twitter-inc-twtr-iplace/.

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