after IPO pricing, ex-Weibo, Sina market cap is about $1.5 billion, of which net cash is about $1 billion so the rest of Sina non-cash assets are worth $500 million. Unfortunately the market sentiment has changed much for social media stocks and don't really think Weibo will pop in the open and Sina trading as a proxy for Weibo isn't the best for Sina holders in general. Even if one see a pop in Weibo, Sina share might not trade in lock step, so there might be some funds moving out of Sina and into Weibo instead. I say we stay range $53 to $54 tomorrow for Sina stock.
So with the IPO set that is around $2 billion worth of Weibo valuation embedded into Sina's stock or little over 50% of its current market value. And if Weibo is raising like under $300 million, is that even enough to stay in the battle for users with cash rich Tencent? Alibaba 32% ownership might make it interesting but looks like they might sell some stock too. Weibo should have IPO'd maybe late last year or early this year, they waited at the worst time to bring this to market, like when Internet high flyers have been cut in half. I say they left about $300 million on the table with such a reduced valuation.
exactly, the analyst note is newsworthy and their market notes are mass disseminated to public and Maxim's clients which means potentially market moving. She is paid to follow the company for years, and probably have some contact at the company so her due diligence carries weight, and that is why anyone with stake in the stock has to pay attention to her comments but like anybody, their arguments might not make sense as in this case.
I wouldn't be surprised if that is the case. Goldman got the last few deals with Sina and I don't think Maxim was even in the underwriter party.
looking at previous comments made by Echo He. She was okay with Sina with alibaba's deal of taking a stake in Weibo knowing full well that Alibaba always had the option to increase the stake, she was even okay this year when Weibo showed slower growth in traffic because she said Alibaba presence and long term value was there. Now, all of a sudden, because of Alibaba increased it stake, she thinks that warrants a $25 shave in PT to mid 60's from 90 (her previous target)...all because Alibaba is getting more shares of Weibo? And everyone knows Alibaba had this option, so why was the analyst bullish a few months ago? those options to buy more shares in Weibo was pretty much a given so her downgrade today is more b.s than anything. There is essentially nothing new that she is pinning her downgrade. This stock is down 3% or less now, suggest to me others are buying on dips on this move.
precisely, what good is it to Alibaba to buy more shares if Alibaba thinks by doing so will drop the price of the stock itself?? So Maxim wanted to downgrade the shares NO MATTER what Alibaba did because it it didn't exercise its option, Maxim would have said Alibaba does not see upside enough to buy into it? but if it did buy more shares, it hurt Sina because they got less of the pie? lol...
that isn't the key take away, it is more that Sina's ownership of Weibo gets diluted further so the analyst downgraded the stock. More to Alibaba means less to Sina...that is the key takeaway... although it makes no sense to me that the analyst would say that.
she is also saying that if Alibaba gets a bigger piece of Weibo, then Sina will get less of this valuable asset and the cash Sina gets in return from Alibaba can't achieve the same return as Weibo. So if Alibaba thinks highly of Weibo to take more shares at a minimum of $5.5 billion valuation then Sina suffers - as if Sina doesn't get any benefit to the upside? It is a head scratcher to hear this logic coming out from someone paid good bucks for making sense. Maxim's clients should grill her logic.
I've met her before. She is bearish on a lot of Chinese internet stocks in general. She started covering chinese stocks at the time when a lot of chinese stocks were crashing due to scams, so she has a very very conservative view across all chinese stocks in general.
just saw the piece of Echo He's downgrade. It makes no sense. She downgraded the stock because she thinks Alibaba taking the additional 12% stake at a discount to market price or $5.5 billion valuation means Sina won't get the benefit of the upside of Weibo. But that thinking makes no sense. What is worst? Alibaba not exercising its option would suggest they don't think highly of Weibo (in which case the analyst would probably use that excuse to downgrade the stock!). And she never even considered the fact that Alibaba would want their investments in Weibo to rise in price so essentially the more stake Alibaba has in Weibo, the more they want to see Weibo succeed...instead she is suggesting Weibo piece to Sina gets cut and what remains for Sina is not as valuable? that makes zero sense. Maxim wants this lower to buy.
when they are probably working this up and down, they''ll make money on both sides of the trade.
didn't read the prospectus either but FT reported that preliminary indications of IPO of $500 million to $700 million will be cash in the coffer to Sina as it retains Weibo as a majority holding. So doesn't look like Sina shareholders willt get shares of the new IPO, instead, it will be cash to the company for it to repay debts and corporate purposes.
good post, rare to find substance in Sina board. With spinoffs, sometimes it isn't as simple as adding the valuation of Weibo into Sina's stock and then just computing the share price of Sina. It should be that way but the PPS often times trade at a discount until the spinoff is a few day from really happening so I expect the price of Sina to stay until $75 especially since the news is out already. A few days before the actual spinoff and pricing is more certain, then if $5 to $8 billion valuation sticks, then yes, this should move towards $80+. Will be interesting to see on Monday how the options are pricing this 3 to 6 months out. Also, those convertibles at $120+ 3 years from now, investors in those bonds want to cash in too but need this to be in the 100s to do so.
rude thinks sina will bounce? lol, that is like asking if rude likes anything that deals with Chinese, he hates anything that deals with Chinese.
I thought Tim said he was going to talk about it later in the evening but I didn't see him on any shows on CNBC taped online afterwards? or maybe I just couldn't find it.
how do you even know what I did, what I own or not own, how I vote or didn't vote?? why u assume anything? My comment to you have nothing to do with what I think of Yong. Worthless stock? it is trading $4 to $5 per share, #$%$ are u talking about again? save your last brain cell.
OMG, u are getting dumber by the minute, the more you post, the more I diotic you sound. The way you describe it, CDB is a charity organization looking to save US investors??? lol... like they give a f about any investors except themselves. You must be leaking brain cells by the minute with every post you make and you didn't start out with many so do yourself a favor and salvage something.