Weibo Corp (ADR) (NYSE:WB) should be suffering the same fate as its famous U.S. micro-blogging site, Twitter Inc (NASDAQ: TWTR). That is to say, it should be losing market share and relevance as it ages.
But it isn’t. The opposite is happening.
WB stock is going like gangbusters. Year-to-date, the stock is up 120%. In October, Weibo hit its 52-week high, but since then it’s rattled around just below that mark.
Now people are wondering if the best days are behind WB stock. I, however, am not asking that question because I see a lot more upside left for Weibo.
Partially owned by Chinese online media giant Sina Corp (NASDAQ:SINA) and Chinese digital retailer Alibaba Group Holding Ltd (NASDAQ:BABA), WB stock has really begun to separate out itself from its two biggest investors.
SINA and BABA are like the Alphabet Inc (NASDAQ:GOOGL, NASDAQ:GOOG) and Amazon.com, Inc. (NASDAQ:AMZN) of the Chinese online marketplace. It makes perfect sense that they would want to nurture and develop Weibo because of its online advertising potential.
Many have been expecting BABA to simply buy WB stock, but now Weibo is standing on its own and is no longer as dependent upon its large investors. For example, last year BABA was responsible for about 25% of Weibo’s revenue — this year that number is 5%.
Unless Alibaba plans on bidding on SINA shares and opening WB shares at a major premium, it looks like WB stock is reaching escape velocity.
But the compelling thing about the relationship among the three companies is, it isn’t so much competitive as it is complementary.
Each provides added value to the other and given the huge potential growth in the Asian market, they have a lot of upside.
But WB stock is the fastest grower right now. And it’s selling at a good price. Plus, Weibo stock continues to keep up its powerful growth — revenues were up 42% year-over-year. Advertising and marketing revenue was up 48% year-over-year. Net income increased 122%.
Monthly active users grew an impressive 34% year-over-year, with 89% mobile users. That means WB is getting the most valuable customers with the best value prospects for advertisers.
This is like a mirror image of Twitter. Except that the lack of growth possibilities, a highly competitive environment and no one interested in partnering has made TWTR stock a lost cause.
Weibo on the other hand, has rejuvenated its format — you can now use more than 140 characters, but only the first 140 show up on the WB home page. It also has incorporated video and more Facebook Inc (NASDAQ:FB)-like social media features.
With a $9 billion market cap, WB stock is still a very attractive takeover target, but it would have to sell at a major premium given its current growth. The point is, whether it stands on its own or is snatched up by a bigger player, this is a great time to move into WB.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
