Investors Punish Sina for Slow Weibo Progress
Leading Web portal Sina (Nasdaq: SINA) is discovering there’s nothing like a good rumor to hammer one’s stock. The company’s shares are down nearly 18 percent over the last two days, including a 15 percent tumble on Tuesday, apparently on concerns that Beijing is preparing to license all microblogging siites, and that Sina’s sector leading Weibo service is not among 4 companies set to receive licenses. (Chinese article) Beijing has certainly shown a recent tendency to want to license things on the Internet, first requiring electronic payments firms to register with the government and later making similar requirements for online mapping companies. But in both instances, the government has shown little or no inclination to severely limit the number of licenses, and instead these mandates look more like efforts to provide more government oversight to ensure orderly development. That said, we’ve heard little or no indication so far that Beijing wants to regulate other areas like search, music, video or online games by forcing all participants to get government licenses. In this case, I suspect the sell-off reflects investor fatigue over the near non-stop hype surrounding Weibo since Sina spun it off into a standalone unit earlier this year (previous post) in preparation for a separate listing as soon as next year if the unit can find a way to turn its vast user base of 200 million into a profit center. Even after the sell-off, Sina’s price to earnings ratio for the next year is quite high at 125, though that probably doesn’t include any contribution from Weibo. Inn that light, this sell-off seems to be a call by investors for Sina to tone down the Weibo hype and instead to show some profits for this asset that looks attractive for its user base but has yet to show any contribution to Sina’s bottom line. Given Sina’s strong record at execution, I would say that Weibo should finally be able to show investors some money as soon the end of next year.
Bottom line: A sell-off of Sina shares reflects investor impatience over development of its Weibo microblogging site, which could turn a profit as soon as the second half of next year.
Related postings 相关文章:
◙ Sina, Tencent Pose Threat in SNS, E-Commerce 新浪腾讯攻城掠地
◙ Sina’s Weibo Steps Outside China 新浪微博进军日本市场
◙ Weibo in Smart Telecom Tie-up, Silly English Move 微博与中国电信合作实属明智之举 推英文版纯属浪费时间
