Weibo Corp (ADR) (NASDAQ: WB) usually gets hung with descriptor of ‘China’s Twitter Inc (NASDAQ: TWTR)’. But the fact is, that microblogging platform is just the beginning of the WB empire. Because of its diversity and the growth it continues to experience, WB stock is more like a diversified Facebook Inc (NASDAQ: FB) rather than TWTR.
WB was spun out of the diversified Chinese online media company SINA Corp (NASDAQ: SINA), which still has a 46% share in WB.
SINA is a way some investors play WB, since SINA is more broadly diversified and still can capitalize on WB success.
The flip side to that is, WB is doing well, so there is likely more value sticking with the winner than betting on all the properties SINA is sitting on that don’t seem to working out as well as WB.
The best example of the risks in this strategy was when Yahoo! was struggling, some analysts were still touting it because Yahoo! had a 15% stake in Chinese ecommerce giant Alibaba Group Holding Ltd (NYSE: BABA).
If you want to own BABA, buy BABA, not a company that owns BABA stock.
And while I’m talking about BABA. It owns 31.5% of WB stock. That means 77% of WB stock is now in the hands of 2 of the biggest online players in China.
That may seem a bit worrisome to U.S. investors since it doesn’t give outside investors a lot of representation. But the fact is, this is a Chinese company providing Chinese services to Chinese customers.
And these relationships don’t hurt WB, they help it. If the companies’ fortunes are linked, WB has powerful partners that are interested in its success. And they can use their platforms to encourage success.
WB Earnings
Q1 numbers were released in May and they showed that WB is still growing rapidly.
Monthly active users were up another 79 million to 392 million, with 93% mobile users. Daily active users were up 33 million to 172 million.
Net revenue was up 77%.
Q2 numbers won’t be ready until August 8, but it’s unlikely the numbers are going to dive.
The biggest thing holding WB stock down–it’s off 20% in the past 3 months and 13% year to date–is the trade war with China. The odd thing is, the trade war has little to do with WB.
WB Stock Is NOT at Risk From the Trade War
To underscore that fact, WB stock is still up 20% in the past 12 months. That means there are still some investors that are not scared off by this latest short-term issue.
If WB was in the steel industry or was dependent upon U.S. subscribers that would mean something. But the Chinese are establishing a massive middle class and their millennials and Gen Zers are avid social media participants.
What’s more, even with ‘slow’ economic growth, China is growing nearly 3x faster than the US and Europe. And this digital native demographic is gaining more and economic power.
Don’t fight that tape.
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.
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