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Category: Stock Market and Weibo
Date: 20 May 2020 Stock Price: $35.89 We take a look at the 1st quarter 2020 earnings report Weibo, one of the leading social media platforms in China with 241 million daily active users on their platform.
We are satisfied with our first quarter result amid the coronavirus pandemic - Gaofei Wang, CEO of Weibo " |
About Weibo
Weibo is a leading social media for people to create, share and discover content online. It combines the means of public self-expression in real time with a powerful platform for social interaction, content aggregation and content distribution. Any user can create and post a feed and attach multi-media and long-form content. User relationships on Weibo may be asymmetric; any user can follow any other user and add comments to a feed while reposting. This simple, asymmetric and distributed nature of Weibo allows an original feed to become a live viral conversation stream.
Weibo enables its advertising and marketing customers to promote their brands, products and services to users. Weibo offers a wide range of advertising and marketing solutions to companies of all sizes. The Company generates a substantial majority of its revenues from the sale of advertising and marketing services, including the sale of social display advertisement and promoted marketing offerings. Weibo has developed and is continuously refining its social interest graph recommendation engine, which enables its customers to perform people marketing and target audiences based on user demographics, social relationships, interests and behaviors, to achieve greater relevance, engagement and marketing effectiveness.
Weibo enables its advertising and marketing customers to promote their brands, products and services to users. Weibo offers a wide range of advertising and marketing solutions to companies of all sizes. The Company generates a substantial majority of its revenues from the sale of advertising and marketing services, including the sale of social display advertisement and promoted marketing offerings. Weibo has developed and is continuously refining its social interest graph recommendation engine, which enables its customers to perform people marketing and target audiences based on user demographics, social relationships, interests and behaviors, to achieve greater relevance, engagement and marketing effectiveness.
Overview of Weibo's 1st quarter 2020 earnings report
The data below refers to the latest quarter unless specified otherwise:
- Revenues: $323.389 million (down strongly from $399.117 million from the same quarter of the previous year)
- Revenues decreased by -18.9% over the last 12 months
- Total costs and expenses: $265.374 million (down from $276.108 million for the same quarter of the previous year)
- Costs and expenses decreased by -3.9% over the last 12 months.
- Net income: $52.108 million (down from $150.442 million for the same quarter of the previous year)
- Diluted earnings per share: $0.23 (down from $0.66 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 227.029 million (up from 232.894 million for the same quarter of the previous year)
- Cash and cash equivalents: $1131 billion
- Cash and cash equivalents per share: $4.98
- Cash and cash equivalents makes up 13.9% of Weibo's market capital
- Cash and cash equivalents makes up 23.6% of Weibo's total assets
- Stockholders equity in Weibo: $2.311 billion
- Stockholders equity per Weibo share: $10.17
- Weibo is trading at 3.52 times its shareholders equity which is well within the expected range of between 2 and 4 times that most firms tend to trade at
- For some perspective the average price to book ratio of firms in the S&P 500 is 3.7. Read more about the S&P 500 here.
Weibo's management commentary on their 1st quarter 2020 earnings report
BEIJING, May 19, 2020 /PRNewswire/ -- Weibo Corporation ("Weibo" or the "Company") (NASDAQ: WB), a leading social media in China, today announced its unaudited financial results for the first quarter ended March 31, 2020.
"We are satisfied with our first quarter result amid the coronavirus pandemic," said Gaofei Wang, CEO of Weibo. "In this challenging period, Weibo has further demonstrated its indispensable value as a leading social media platform to keep the public informed, connected and engaged. In March, we delivered our strongest user growth in terms of net additions of MAUs and DAUs on a year-over-year basis. On monetization, we have seen a gradual recovery trend since March for most brands and merchants from the trough in February, although there are still uncertainties brought forth by the pandemic. We will continue to focus on optimizing ad products and enhancing ad performance for advertisers to further tap into advertisers' social ad wallet and improve our monetization efficiency," said Mr. Wang.
First Quarter 2020 Highlights
"We are satisfied with our first quarter result amid the coronavirus pandemic," said Gaofei Wang, CEO of Weibo. "In this challenging period, Weibo has further demonstrated its indispensable value as a leading social media platform to keep the public informed, connected and engaged. In March, we delivered our strongest user growth in terms of net additions of MAUs and DAUs on a year-over-year basis. On monetization, we have seen a gradual recovery trend since March for most brands and merchants from the trough in February, although there are still uncertainties brought forth by the pandemic. We will continue to focus on optimizing ad products and enhancing ad performance for advertisers to further tap into advertisers' social ad wallet and improve our monetization efficiency," said Mr. Wang.
First Quarter 2020 Highlights
- Net revenues were $323.4 million, a decrease of 19% year-over-year or 15% year-over-year on a constant currency basis [1].
- Advertising and marketing revenues were $275.4 million, a decrease of 19% year-over-year.
- Value-added service ("VAS") revenues were $48.0 million, a decrease of 17% year-over-year.
- Net income attributable to Weibo was $52.1 million and diluted net income per share was $0.23.
- Non-GAAP net income attributable to Weibo was $67.4 million and non-GAAP diluted net income per share was $0.30.
- Monthly active users ("MAUs") were 550 million in March 2020, a net addition of approximately 85 million users on year over year basis. Mobile MAUs represented approximately 94% of MAUs.
- Average daily active users ("DAUs") were 241 million in March 2020, a net addition of approximately 38 million users on year over year basis
Advertising and marketing revenues for the first quarter of 2020 were $275.4 million, a decrease of 19% compared to $341.1 million for the same period last year. Advertising and marketing revenues from key accounts ("KAs") and small & medium-sized enterprises ("SMEs") were $247.9 million, a decrease of 24% compared to $324.5 million for the same period last year. The decrease was primarily resulted from the adverse impact of the coronavirus pandemic on the overall advertising demand, decrease in barter transaction revenues as well as negative currency translation impact.
Business Outlook
For the second quarter of 2020, Weibo estimates its net revenues to decrease by 7% to 12% year-over-year on a constant currency basis. This forecast reflects Weibo's current and preliminary view, which is subject to change.
Business Outlook
For the second quarter of 2020, Weibo estimates its net revenues to decrease by 7% to 12% year-over-year on a constant currency basis. This forecast reflects Weibo's current and preliminary view, which is subject to change.
Weibo Corporation (NASDAQ: WB) stock price history
The image below, obtained from Google, shows the stock price history of Weibo (NASDAQ: WB) for the last 5 years. And its been a very good time for Weibo stockholders. 5 years ago the stock was trading around $16.20 and today its trading at $35.89 That's a more than decent return of 121.5% provided to Weibo stockholders over the last 5 years.
The stock of Weibo is currently trading at a lot closer to its 52 week low of $29.50 than it is to its 52 week high of $55.52 which to us is a clear indication that the short term sentiment and momentum of Weibo stock is negative.
The stock of Weibo is currently trading at a lot closer to its 52 week low of $29.50 than it is to its 52 week high of $55.52 which to us is a clear indication that the short term sentiment and momentum of Weibo stock is negative.
Recent Google search trends for Weibo stock price and WB stock price
The graphic above shows the trends in Google searches for Weibo stock price and WB stock price in the United States over the last 12 months as obtained from Google Trends. As it shows there is pretty limited interest in both google queries. But one would be better off using WB stock price instead of Weibo stock price as there are more searches for this query and you are probably more likely to find the information you want using this search phrase.
Recent coverage of Weibo (NASDAQ: WB)
The extract below shows recent coverage of Weibo as obtained from Investors.com
China social media company Weibo (WB) reported mixed first-quarter results Tuesday morning that slightly missed on earnings but beat on revenue. Weibo stock fell. The company reported adjusted earnings of 30 cents per share on revenue of $323.4 million. Wall Street expected earnings of 31 cents on revenue of $322.8 million. Revenue rose 19% from the year-ago quarter. Daily active users rose to 241 million, up 38 million from a year earlier. Advertising and marketing revenues fell 19% to $275.4 million.
Weibo stock fell 1.9%, closing at 35.89 on the stock market today, just above its 50-day moving average. The company provides an online service comparable to Twitter (TWTR). Weibo is majority owned by Sina (SINA), which reported better-than-expected first-quarter results early Tuesday.
Read the full article here
China social media company Weibo (WB) reported mixed first-quarter results Tuesday morning that slightly missed on earnings but beat on revenue. Weibo stock fell. The company reported adjusted earnings of 30 cents per share on revenue of $323.4 million. Wall Street expected earnings of 31 cents on revenue of $322.8 million. Revenue rose 19% from the year-ago quarter. Daily active users rose to 241 million, up 38 million from a year earlier. Advertising and marketing revenues fell 19% to $275.4 million.
Weibo stock fell 1.9%, closing at 35.89 on the stock market today, just above its 50-day moving average. The company provides an online service comparable to Twitter (TWTR). Weibo is majority owned by Sina (SINA), which reported better-than-expected first-quarter results early Tuesday.
Read the full article here
Comparing the stock of Weibo (NASDAQ: WB) to that of Twitter (NYSE:TWTR)
The image below shows the stock price performance of Weibo (WB) and Twitter (TWTR) over the last 3 years.And from the graph it is clear that the stock of Twitter has easily outperformed that of Weibo over the last 3 years.
Over the last 3 years the stock of Weibo has declined by -52.33% while the stock of Twitter increased by 63.91% over the same period of time. So if you had to make a choice three years ago on whether to invest in Weibo or Twitter we hope you selected Twitter.
Weibo (NASDAQ: WB) latest stock valuation
So based on the 1st quarter 2020 earnings report of Weibo (NASDAQ: WB) what do we value Weibo stock at? Based on the earnings reported by Weibo our valuation model provides a target price (full value price) for Weibo at $36.10 a stock (down from our 3rd quarter 2020 earnings report review target price of Weibo).
We therefore feel that the stock is close to being fully valued at its current price. We usually recommend that long term fundamental or value investors should look to enter the stock at is at least 10% below our target price (full value price) which in this case is $36.10. We therefore believe a good entry point into Weibo stock would be around $32.50 or below. We expect the stock of Weibo to trade in a narrow range around its current price in coming weeks and months until their next set of financial results provides better guidance as to there the stock should be trading at.
We therefore feel that the stock is close to being fully valued at its current price. We usually recommend that long term fundamental or value investors should look to enter the stock at is at least 10% below our target price (full value price) which in this case is $36.10. We therefore believe a good entry point into Weibo stock would be around $32.50 or below. We expect the stock of Weibo to trade in a narrow range around its current price in coming weeks and months until their next set of financial results provides better guidance as to there the stock should be trading at.
Next earnings release of Weibo
It is expected that Weibo will release their 2nd quarter 2020 earnings report in mid August 2020