Sina’s (SINA) Profits Continue to Suffer, but Markets Focused on Explosive Weibo Growth

There has not been much use looking at company fundamentals the past month, as the macro has dominated everything but eventually the focus will return back to individual stories.  Sina (SINA) reported earnings Wednesday night and much like the previous quarter, profits are suffering as the company continues to plow dollars into their Twitter like service, Weibo.  That service has now hit the 200M user mark, which is remarkable – but like the U.S. version, one wonders how many are active accounts.  Whatever the case, it appears Sina has already ‘won’ the space with its first mover advantage.  Now the trick will be to monetize it without turning off users, something Twitter also is facing.

Technically, this is not normally a great chart setup, but in this type of market its one of the better ones, all things considered.  I have not drawn the 2 diagonal lines but Sina is forming a huge triangle, with the range narrowing as you go to the right side of the page.  Usually whichever direction a stock breaks out from, out of this formation leads to an explosive move.

Via Reuters:

  • Sina Corp, China’s largest Internet portal, said net profit fell 60 percent as the firm spent heavily on investment in its highly popular microblogging service, Weibo. Sina said on Wednesday it earned a second-quarter net income of $10 million, or 15 cents a share, compared with $25.2 million or 38 cents a share for the same period a year ago.   Excluding one-off items, it earned 20 cents a share, beating the average forecast of earnings of 19 cents a share, according to Thomson Reuters I/B/E/S.
  • Revenue excluding Sina’s separate real estate advertising business rose 21 percent to $114.3 million, within the range of its forecast of $112 million to $115 million.
  • Advertising revenue jumped 26 percent year-over-year to $91.8 million in the second quarter, while mobile-related revenue declined 2 percent to $19.5 million
  • For the third quarter, Sina expects adjusted revenue between $123 million and $126 million, versus analysts’ expectations of $125.7 million.
  • Sina, which rolled out its Weibi virtual currency this month, is trying to generate revenue from Weibo and turn it into a full-fledged social networking site.

The WSJ takes a closer look (video and story)

About Mark Hanna 542 Articles

Affiliation: Hanna Capital, LLC

Mark Hanna is President and Owner of Hanna Capital, LLC, a registered investment advisory firm. Mark has been a follower of markets since the late 80s, with a focus on individual equities since the mid 90s. He has been a well known commentator in the financial blogosphere for the past 5 years, following a career in corpoporate finance and accounting. Mark attended the University of Michigan where he graduated with a degree in Economics.

As an avid reader, Market Montage is the personal blogging site for Mark to share his views on economics, markets, and the like. Occasional cynicism and wit shall be deployed in his postings.

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