Earnings for this Chinese Internet company are growing at a double-digit pace. Zack’s just recommended the shares, based on that growth, as well as rising earnings estimates.
Weibo (WB)
From Cabot Emerging Markets Investor
I’m changing my top pick for 2016 because my original choice is proving to be a longer-term project that I anticipated. I still believe that Alibaba (BABA) will prove itself worthy in the long run, but I don’t think that end is in sight.
My new top pick for 2016 is Weibo (WB), a Chinese social media company whose service plays out like Twitter, but with a healthy serving of Facebook included. Weibo began life as a messaging service of Sina.com, a hugely popular web portal, but was spun off in March 2014 and came public in April 2014. In addition to posting original content, Weibo also gives users access to games, news, weather, sports and payment services.
Weibo’s latest quarterly report showed great progress in all metrics, including an increase in monthly active users (MAU) to 261 million (up from 222 million in Q1) and 120 million daily active users. That report also revealed a 24% jump in revenue and a stunning 600% jump in earnings. Estimates of the company’s 2016 earnings growth call for a 72% increase in 2016 and 69% growth in 2017.
While Sina.com retains a large majority of Weibo’s stock, online marketplace giant Alibaba owns almost 20%. And one recent surge in WB was caused by rumors (quite plausible, given Alibaba’s vast cash stores) that Alibaba was looking to boost its stake.
Weibo has a huge user base, and recent quarterly results show that the company is learning how to monetize that base. And with the promise of potential synergies in cooperation with Alibaba, the future looks golden.
Paul Goodwin, Cabot Emerging Markets Investor, www.cabot.net, 978-745- 5532, June 30, 2016