Weibo Corp (ADR) (NASDAQ:WB) is often referred to as the Chinese Twitter Inc (NYSE:TWTR), but it’s much more akin to Facebook Inc (NASDAQ:FB). Even its Nasdaq ticker hews much closer to a FB comparison than to TWTR’s conventional four-letter ticker. But the similarities go far deeper than just U.S. stock listing.
WB is the leading microblogging site in China. And there are several competitors that have substantial resources at their disposal. But that has helped Weibo become the company it is, rather than detract from it.
What Makes Weibo Special?
Launched in 2009, WB was spun off from major Chinese internet player Sina Corp (NASDAQ:SINA) in 2014. SINA still maintains an 11% ownership stake in the firm. Then another major Chinese online firm, Alibaba Group Holding Ltd (NASDAQ:BABA), stepped in to take a 30% stake.
While this may seem like a bad thing, it was actually a very good deal for WB. You see, these two giants would now build WB into their ecosystems, which would keep Weibo ahead of the competition and not force it to find its own strategic partners to expand its growth.
And this kind of thinking is what sets WB apart from its U.S. compatriot TWTR. The latter is still trying to figure out how to grow and where to grow all while trying to remain relevant, as other social media sites erode its value.
In the case of WB, it threw out its 140-character limit over a year ago and is a platform more like Facebook today than Twitter. With the help of its partners, it has been able to grow its advertising and its proprietary gaming revenues significantly.
The numbers are impressive and it’s much closer to the beginning of its growth than to its maturity — again more like FB than TWTR.
In Q4 2016, WB grew its monthly active user base 33% (year over year) to 313 million. Its daily active users were up 30% to 139 million. Remember, WB isn’t just looking at mainland Chinese users, but Chinese around the world. It also may look to acquire a U.S. brand to expand its reach.
Bottom Line on WB Stock
WB stock is certainly building a war chest to grow. For FY 2016, revenue was up 37% year-over-year and advertising and marketing revenue was up 42% over the same period. Net income increased 211%.
WB is up 115% in the past 12 months, but the good news is that in the past six months, it has simmered down a bit. Some of this is simply caution after its big run, some has to do with hedging around earnings.
But with the Chinese economy back on the growth track, this is a great opportunity to buy into this consolidation because there is certainly more serious growth in store for this stock.
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.
