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Weibo's (WB) Q1 Earnings Coming Up: What Lies in Store?

Zacks Equity Research

Weibo Corporation WB is scheduled to report first-quarter 2019 results on May 23.

Notably, the company beat the Zacks Consensus Estimate in the trailing four quarters, delivering an average positive surprise of 2.7%.

In the last reported quarter, the company’s adjusted earnings of 80 cents per share surpassed the Zacks Consensus Estimate of 70 cents. The figure also surged 25% year over year.

Revenues of $481.9 million increased 27.7% from the year-ago quarter and marginally beat the Zacks Consensus Estimate of $481.5 million. Notably, the company added 70 million monthly active users (MAUs) year over year in fourth-quarter 2018, which totalled to 462 million.

Weibo Corporation Price and EPS Surprise

Weibo Corporation Price and EPS Surprise

Weibo Corporation price-eps-surprise | Weibo Corporation Quote

The Zacks Consensus Estimate for first-quarter earnings has remained steady at 55 cents per share over the past seven days, indicating an increase of 10% from the year-ago period.

Further, the consensus mark for revenues is pegged at $401.5 million, up 14.8% from the year-ago quarter. Notably, Weibo expects net revenues to be in the range of $395-$405 million, indicating year-over-year growth of 20.5% to 23.5%, on a constant currency basis.

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

Factors at Play in Q1

Weibo’s strategy to create more premium content is likely to aid user base expansion in first-quarter 2019. Additionally, increase in availability of hot search and topic products is anticipated to boost new users on the platform.

Moreover, Weibo’s collaborations with TV and smartphone manufacturers in the area of content are expected to improve user engagement levels and bolster user base in the to-be-reported quarter.

Weibo’s decision to increase more verticals in short video products may have allowed content creators to generate a variety of content on the platform. This may help the company boost its product usage and attract a greater number of content creators. Additionally, increase in content availability is likely to boost the number of paying users thereby improving monetization opportunities in first-quarter 2019.

Moreover, with growth in premium content consumption and increase in paying users, Weibo’s competitive position may improve. This is expected to aid the top line in the to-be-reported quarter.

However, Weibo’s ad revenues may be negatively impacted in first-quarter 2019 due to uncertainty in sectors like IT, automobile and entertainment. Additionally, SME ad revenues are anticipated to bear the brunt of uncertain macro environment and regulatory concerns in the to-be-reported quarter.

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.  Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Weibo has a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

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

Verint Systems Inc. VRNT has an Earnings ESP of +2.94% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Intuit Inc. INTU has an Earnings ESP of +0.59% and a Zacks Rank #2.

Synopsys, Inc. SNPS has an Earnings ESP of +0.92% and a Zacks Rank #2.

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Weibo Corporation (WB) : Free Stock Analysis Report
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