SINA Corp (NASDAQ:SINA) posted solid results on Wednesday, but investors didn’t seem to be impressed. SINA stock actually went down more than two percent the next morning. But note this: Sina has a controlling interest in one of the fastest-growing social media companies in China—Weibo Corp (ADR) (NASDAQ:WB).
This Could Be Huge for SINA Stock
For those not familiar with the company, Sina operates through three main segments: its web portal Sina.com, its mobile portal “Sina Mobile” along with apps, and its social media outlet Weibo. The last one is where the growth really is.
In case you haven’t noticed, U.S.-based social media companies don’t really have much of a presence in China. That’s because the country often has its own versions of these social media platforms. For instance, Sina’s Weibo is known as the “Chinese Twitter.”
While Twitter is having a hard time finding growth in its userbase, its Chinese counterpart doesn’t really have this issue. In the month of December, Weibo’s monthly active users (MAUs) grew 34% year-over-year to 236 million. In line with the trend of shifting to mobile, 83% of Weibo’s MAUs were mobile users. (Source: “Weibo Reports Fourth Quarter and Fiscal Year 2015 Financial Results,” Weibo Corp, March 2, 2016.)
The company also managed to monetize its strong user growth. In the fourth quarter of 2015, Weibo’s advertising and marketing revenue surged 47% year-over-year to $129.5 million. Revenue from Weibo’s value added services also increased—13% year-over-year to $19.5 million.
The solid growth from Weibo contributed to SINA stock’s financials. In the fourth quarter of 2015, Sina’s online advertising revenue totaled $223.2 million, up 22.7% from the year-ago period. The operational leverage achieved by Weibo also boosted Sina’s income from operations, which saw a seven-fold year-over-year increase to $29.6 million for the period. (Source: “Sina Reports Fourth Quarter and Fiscal Year 2015 Financial Results,” SINA Corp, March 2, 2016.)
The Bottom Line on SINA Stock
At the end of the day, there is one critical set of numbers that public companies need to beat—analyst’s estimates. For the most recent quarter, analysts were expecting a profit of $0.33 a share on $241.7 million in revenue. How did Sina do? It reported revenue of $256.2 million and earnings of $0.35 per share.
Moreover, Sina managed to beat earnings-per-share (EPS) estimates in all four quarters of 2015. (Source: “Analyst Estimates,” Yahoo! Finance, last accessed March 3, 2016.)
It might also be helpful to know that Sina has $2.4 billion in cash, which could be used to return value to shareholders. In fact, the company just announced a new share repurchase program, allowing the company to buy back up to $500 million worth of SINA stock by the end of June 2017.
With a growing social media segment, a solid balance sheet, and efficient operations, the outlook is bright for SINA stock.