Analyst Note| Ivan Su |
Narrow-moat Weibo reported robust third-quarter financial performance. Specifically, Weibo’s net revenue reached CNY 607 million with a year-on-year growth of 30% during the quarter, beating Factset's consensus by 3% but in line with our forecast. Despite the regulatory headwinds that the China Internet industry is facing recently, Weibo maintained robust top-line growth largely thanks to the 29% annual growth for advertising and marketing segment. We keep our fair value estimate at $32.20 and still view shares of Weibo as overvalued. Our implied 2022 forward price-earnings ratio of 14.4 times is close to the consensus estimate of 14.6 times. The overvaluation is mainly due to a lower long-term forecast on Weibo’s advertising revenue growth, as we think Weibo will gradually lose user traction and time spent to apps with stronger ecosystems, such as WeChat and TikTok.