Friday, 13 March 2015

Sina and Weibo - part 2

In 'Sina and Weibo - part 1' (link here) I concluded that essentially all the value in Sina was derived from its holding in the micro-blogger (aka "Twitter-esque") Weibo so it seems to me if there is any value in these companies you may as well look at Weibo directly.

As noted at the above link usefully both Sina and Weibo reported their Q4/FY numbers earlier this week.  What to note at Weibo?

Of course the first statistic to note is that at a US$3.1bn market cap (US$2.6bn EV) the company is trading a little below x10 FY14A revenues and is still running at a small loss ('enable us to narrow Weibo's non-GAAP loss in 2014 to $1.7 million from a loss of $30.8 million the year before').

As with Twitter the talk is all about monetisation opportunities derived from photos, SME expansion, group chat and a wider use of 4G.  There has been good growth per se with Q4 revenues up 47% year-on-year and daily active users reaching 81 million (+31% year-on-year, engagement levels flattish a little under 50%), 80% of which used mobile.

So clearly there is growth but US$2.6bn worth of EV value?  Unlike more grown-up businesses (Alibaba, Tencent - the latter of course owns the major competitor to Weibo, WeChat) no profits or cash flow.  It may come...but for such an exposure give me Twitter any day as appraised here.  

Weibo may be closer to its lows than its highs but I am leaving it to the experts.  Good luck to all shareholders.  

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