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Weibo (WB) to Report Q3 Earnings: What's in the Offing?

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Weibo (WB) to Report Q3 Earnings: What's in the Offing?

Weibo's (WB) third-quarter results are likely to be hurt by the intensifying competition in the advertising market.

Weibo WB is expected to report third-quarter 2018 results on Nov 13. 


In the last reported quarter, Weibo reported earnings of 68 cents per share that beat the Zacks Consensus Estimate by a penny. Revenues of $426.6 million also beat the consensus mark of $425 million and increased 68% year over year. 


For third-quarter 2018, Weibo estimates net revenues between $465 million and $475 million, an increase of 49-52% year over year on a constant currency basis.


The Zacks Consensus Estimate for third-quarter earnings has remained at 74 cents over the past seven days. The consensus mark for revenues currently stands at $453.8 million, reflecting year-over-year growth of 41.8%.


Let’s see how things are shaping up for this announcement.


Key Factors to Watch Out 


Weibo is expected to benefit from its expanding user base. In the last reported quarter, monthly active users (MAUs) grew approximately 70 million year over year and reached 431 million in June 2018.

Weibo Corporation Price and EPS Surprise


Weibo Corporation Price and EPS Surprise | Weibo Corporation Quote


Improving user engagement and monetization capability are key catalysts. Weibo has diversified its ad offerings to address different customer segments, including individuals as well as small and medium-sized enterprises. This is driving the company’s advertising revenues that surged 69% from the year-ago quarter to $369.9 million.


Moreover, Weibo’s ability to generate higher return on investment (ROI) for advertisers, owing to its popularity and increasing user base, is expected to drive advertising revenues. Moreover, the uni-marketing program with Alibaba that enables brand advertisers to target appropriate audience is also a growth factor.


However, intensifying competition in advertising market is a headwind. Additionally, anticipated sluggishness in the short video app user growth rate is a concern.  


Weibo’s advertising revenues are also expected to hurt from lower advertising spending related to new mobile games due to the suspension in mobile game license approval in China. The suspension has delayed launch of new games by prominent developers.


What Our Model Says


According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. 


Weibo has a Zacks Rank #4 and an Earnings ESP of -3.14%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.


Stocks With a Favorable Combination


Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:


NetApp NTAP has an Earnings ESP of +0.83% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.


Bitauto Holdings BITA has an Earnings ESP of +12.36% and a Zacks Rank #2.


Globant GLOB has an Earnings ESP of +7.31% and a Zacks Rank #3.

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