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Weibo Corp ADR WB

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Morningstar’s Analysis

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Weibo Posted Strong Advertising Revenue Growth for the Third Quarter; FVE Unchanged

Ivan Su Senior Equity Analyst

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. 

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Company Profile

Business Description

Weibo is the largest social media platform in China. As of 2020, Weibo had 521 million monthly active users and 225 million daily active users, many of whom are drawn there by the millions of key opinion leaders in entertainment, sports, and business circles. Sina is the major shareholder, holding 44.7% of shares and with 70.8% voting power; Alibaba holds 29.8% of shares and 15.7% voting power.

No. 8 Xinyuan S. Road, 8th Floor, QIHAO Plaza
Beijing, 100027, China, People's Republic of
T +86 1058983095
Sector Communication Services
Industry Internet Content & Information
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 5,073