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SINA Corporation Message Board

  • jmtrombold jmtrombold Nov 19, 2012 11:38 AM Flag

    Weibo Valuation

    Is a very interesting question now being weighed as Alibaba considers its investment. Finally some attention will go to measuring Weibo independently of SINA itself, and the two valuations will be added together and compared to the share price. . . surprise! SINA is undervalued. . .

    Sentiment: Strong Buy

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    • Stifel analyst George Askew’s take on the speculation, noting that Alibaba’s potential stake might reach $600 million. He notes that the investment and implied valuation would be beneficial to the company’s share price and valuation.

      “An investment by Alibaba Group at the valuation suggested coincides with our valuation estimates of Weibo of $3 billion. As of 3Q12 our $3 billion valuation for Weibo equates to $7 per registered user, compared to an estimate of $40 per user at the time of Twitter’s last equity raise. Importantly in our view, SINA does not need to raise capital to fund investment in Weibo – the company had cash, cash equivalents and short term investments at 3Q12 of $696 million, and we estimate that the net investment in Weibo in 2013 will approximate $50 million. We believe SINA would consider the equity investment to gain a strategic partner who can help Weibo with a variety of eCommerce and payments strategies. In addition, we believe the investment and implied valuation would be beneficial to SINA’s own share price and valuation, a likely goal of the company. “

      Sentiment: Strong Buy

      • 1 Reply to anv969
      • At the most basic level of accounting, then: market cap is today $3.2 billion, but Weibo alone without SINA is estimated to be worth $3 billion alone. . .and Weibo currently provides only 16 percent of revenue. On the face of it, SINA stock price should be doubling about now, even making allowances for the analysts' worry that Weibo will steal some ad revenue from SINA. It will be very interesting to see what share price Alibaba will pay. . .

        Sentiment: Strong Buy

    • corcoranrick@ymail.com corcoranrick Nov 19, 2012 2:00 PM Flag

      So JM if Alibaba is going to throw 300-500 million at Sina they have to think there will be a big payoff down the road you would think...I know they want to get more traffice to their other sites from Sina but there needs to be a pretty big revenue prize for them to do this I would think. Not sure what they are buying in at but they must think this the bottom and are buying as low as they think it will go after the ER. We're on the right horse...Just a long race.

 
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