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Weibo (WB) Chart Will Make You Fall in Love with China’s Twitter

By almost all accounts, shares of Weibo Corp (ADR) (NASDAQ:WB) should be tumbling. It’s essentially the Twitter Inc (NYSE:TWTR) of China, and knowing all too well how poorly the United States’ actual Twitter has performed, it’s difficult to imagine the Chinese clone faring any better.

Weibo (WB)There’s also the not-so-small fact that if an investor here or there is going to take a stance in a Chinese internet stock, the ubiquitous Alibaba Group Holding Ltd (NYSE:BABA) is the one most likely to be shoved in their face; Baidu Inc (ADR) (NASDAQ:BIDU), or China’s Google, is a close second.

Yet, the fact of the matter is what Weibo may lack in size, it more than makes up for in fiscal success and WB stock has quietly become one of China’s most compelling opportunities for investors there, here, and at all points in between.

Weibo is Getting the Job Done

Investors can talk about growth potential and prospects and new technologies as much as they want (and they do). At the end of the day, though, the name of the game is setting the stage of earnings growth. Everything else is just a means to that end.

A company does have to get to that end sooner or later, though — and too many of them don’t. Weibo does and, moreover, the pros expect more of the same kind of profit growth going forward. The chart of WB’s past and projected revenue and earnings sums up the story quite nicely.

Weibo (WB) Sales and Earnings, Past and Projected
Click to Enlarge

The image immediately raises one question: How? How can China’s Twitter do what the Western Hemisphere’s Twitter can’t?

The answer is, it’s not like Twitter at all — something most current and would-be owners of WB stock don’t fully understand or appreciate. The fact of the matter is, Weibo is much more like Facebook Inc (NASDAQ:FB) than not, and Facebook is simply more engaging to North American users than Twitter is.

TWTR and WB have some common traits, to be sure. Namely, Weibo’s tweets are also limited to 140 characters. Beyond that, however, key differences take shape.

Why Weibo is Getting the Job Done

One of those differences is a wide array of tools that allows users to embellish their posts with emojis and insert pictures and video. Twitter allows for pictures and links to other web pages, but it’s a clunky outcome.

Also more like Facebook than not, Weibo organizes user responses to comments in distinguishable threads. With Twitter, it’s difficult to determine who’s talking to whom, particularly when a conversation turns into a multi-user debate.

Perhaps more than anything, though, Weibo intelligently organizes topics for discussion so users can find a specific conversation, rather than wait for one to be presented to them by users they follow.

To a non-user, the differences may seem meaningless. To a versed user of both social media platforms though, these seemingly small things are big things. As evidence of that notion, just go back up and look at the company’s earnings and revenue growth track. As was noted, at the end of the day, it’s about how marketable your product really is.

Bottom Line on WB Stock

Don’t get the wrong idea: like any other for-profit outfit, WB faces challenges. One of the newest ones (and some think it could be a big one) the site will face is the lack of anonymity its users will soon face. Government regulators are essentially forcing all internet companies to identify their users as part of a move by the state to get firmer control of the nation’s modest free speech ideals.

As would be the case anywhere, part of the appeal of the social media platform is being able to maintain your privacy and anonymity. It remains to be seen just how much the move will hinder Weibo’s clicks and views, though. It’s unlikely there’s a major, explicit demand for a segment of internet users that need to remain anonymous.

The fact that the stricter rules will apply universally in China also means those users won’t find a more accommodating, anonymous venue anywhere else.

No, while the new internet-user rules may appear to be a headwind on the surface, they’re nothing Weibo can’t handle; it’s fended off bigger challenges. Indeed, it’s even thrived in the midst of those challenges. The growth chart above speaks for itself.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter.


Article printed from InvestorPlace Media, https://investorplace.com/2017/09/weibo-wb-chart-will-make-you-fall-in-love/.

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