Bull of the Day: SINA (SINA) - Bull of the Day
November 15 2013 - 3:11AM
Zacks
SINA (SINA) is one of the largest online media portals in
China, providing users with a broad selection of information,
communications and entertainment choices, while providing
advertisers and content holders with a massive audience to target
with online advertising.
This week the company reported strong 3Q13 results
above expectations, and provided robust 4Q13 revenue guidance
fueled by Weibo, their hugely successful "microblogging" site that
is often compared to a hybrid of Twitter (TWTR) and
Facebook (FB).
SINA reported third quarter earnings of 35 cents
per share that were well ahead of the Zacks Consensus Estimate of
17 cents and the year-ago figure of 8 cents. SINA’s partnership
with the Alibaba group contributed significantly to the company’s
overall results.
Weibo Leads the Way
Weibo total revenue was $53.4 million in the
quarter, 30% of SINA's $179.9 million revenue and more than double
Weibo revenue of $23.6 million in 3Q12. Weibo ad revenue was
$43.7m, up 119% YoY and 46% QoQ.
Weibo’s daily active user (DAU) base increased
11.2% to 60.2 million from the month of June to September. This was
much better than 8.2% growth reported during the March-June
period.
SINA expects revenues for the fourth quarter of
2013 to be in the range of $190.0 million and $194.0 million.
Advertising revenues are expected in the range of $160.0
million–$162.0 million, while non-advertising revenues are
projected in the range of $30.0 million–$32.0 million.
The Zacks Consensus Estimate for fiscal 2013
increased 33.3% to 8 cents per share as most of the estimates were
revised higher over the last 60 days. For fiscal 2014, the Zacks
Consensus Estimate increased 19.3% to $1.42 per share.
Revenue and Margin Drivers
There was a time not too long ago when investors
questioned the worth of Weibo to the company's web strategy. Now,
among the key investment drivers is clearly accelerating
year-over-year revenue growth as Weibo’s revenue momentum and
weighting increases.
And as Weibo moves from adjusted EBITDA losses to
profits, margin expansion is clearly evident. SINA adjusted EBITDA
of $36.3 million reflects a 20.2% margin compared to 10.8% in 3Q12
and a recent trough of 4.2% in 1Q13.
Finally, now that Twitter has just launched its own
successful IPO, the value proposition for the Weibo franchise has
been elevated. And since the Chinese are focused on having their
own Internet players win instead of Google, Facebook, or Twitter,
focusing on the current winners like Baidu (BIDU), Qihoo
360 (QIHU), and SINA is the way to go.
Kevin Cook is a Senior Stock Strategist for
Zacks where he runs the Follow The Money portfolio.
BAIDU INC (BIDU): Free Stock Analysis Report
FACEBOOK INC-A (FB): Free Stock Analysis Report
QIHOO 360 TECH (QIHU): Free Stock Analysis Report
SINA CORP (SINA): Free Stock Analysis Report
TWITTER INC (TWTR): Free Stock Analysis Report
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