39.93 +0.13 (0.33%)
After hours: 6:17PM EDT
|Bid||39.79 x 900|
|Ask||39.93 x 1800|
|Day's Range||39.50 - 40.75|
|52 Week Range||39.50 - 90.80|
|Beta (3Y Monthly)||1.92|
|PE Ratio (TTM)||14.53|
|Earnings Date||Aug 6, 2019 - Aug 12, 2019|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||55.63|
While the U.S. stock market is making fresh new highs, Chinese firms are not enjoying the fun. Chinese stocks remain mired in a bear market, and its tech companies are in a drastic slump. Not surprisingly, iQiyi (NASDAQ:IQ) hasn't been spared. In fact, IQ stock has lost more than half of its value over the past year.Source: Shutterstock Much of this is probably due to external factors. The trade war has scared American investors away from Chinese stocks in general. And China's economy is showing signs of strain. But iQiyi has some concerns of its own that could keep the stock in the doghouse in coming months. Is iQiyi To Fault For Its Massive Stock Price Losses?Chinese stocks have gotten absolutely hammered over the past year. There are 39 Chinese firms with a market cap over $2 billion that have been listed in the U.S. for at least a year.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Best Stocks for 2019: A Volatile First Half Of these, 24 (well more than half ) have lost at least 20% of their value over the past year. Only four out of the 39 have posted a positive return over the past year.IQ stock has been the biggest loser of the bunch, however, shedding 59 percent of its value over the past 12 months. Other notable peers have performed almost as bad, however.Weibo (NASDAQ:WB) is down 58 percent. Sina (NASDAQ:SINA) has plunged 52 percent. And even internet giant Baidu (NASDAQ:BIDU) hasn't been spared; it has knifed 55 percent lower. So IQ stock, while being the worst of a sorry bunch, is hardly an overwhelming outlier. iQiyi's Recent TumbleLike most tech stocks, IQ plummeted to end 2018. Shares recovered to start 2019, but that recent optimism faded in March. Since then, IQ stock has been going straight down again.In addition to the general concerns about the trade war and the health of the Chinese economy, iQiyi is facing two more direct concerns.The first of these is increased government regulation. The China National Radio and TV Administration "NRTA" recently issued more strict guidelines for China's major video players. These will sharply limit the amount of historical dramas that these companies can produce, in relation to dramas based on modern settings.The Chinese government suggested that the video companies were promoting false and harmful views of China's past with these dramas.While this may sound like a silly issue to western investors, it is something to take seriously. Even the most hyper-capitalist of companies must play by a different set of rules in China than they would in places that have more free speech protections.Additionally, it's worth noting that various other Chinese media companies listed in the U.S. have gotten in trouble with the Chinese government for concerns ranging from piracy to sexual content previously, causing sizable share price declines. The current issue with historical dramas will probably blow over. But IQ stock will always face the headwind of the possibility of a government content crackdown at any point.iQiyi also issued more than $1 billion in convertible bonds in March. At the time, it appeared to be a success for IQ stock. They raised money at a lower interest rate and at a less dilutive price than expected. It also represented the second largest convertible bond offering by a Chinese firm in the United States to date.Still, it also appears to have reminded investors that iQiyi has a troubling balance sheet and no plans to make profits anytime soon. When Will iQiyi's Business Model Turn The Corner?It's popular to refer to iQiyi as the Netflix (NASDAQ:NFLX) of China, but this analogy doesn't fully work. For one thing, Netflix relies almost exclusively on subscription revenues. iQiyi, by contrast, gets less than half of its revenues from paid subscriptions. At its price points of $3/month for monthly subscriptions and $2/month for annual subscriptions, iQiyi needs a whole lot of subs to turn a profit.Notably, iQiyi doesn't have the first mover advantage that Netflix did. Already, the Chinese market has three major players. iQiyi has more than 500 million monthly users (not subs), but so does Tencent's offering. Alibaba's (NYSE:BABA) Youku has more than 400 million as well.They all offer competitively subscriptions at super low price points. This makes it difficult for iQiyi to simply copy the Netflix model of raising the subscription price frequently.On the other hand, iQiyi shares a major similarity with Spotify (NYSE:SPOT) rather than Netflix. This is that it has a robust free option, and generates substantial advertising revenues from it.iQiyi, like Spotify, hopes free users will upgrade over time, but it's not a completely closed community like Netflix. Advertising, though down as a percentage of the pie, still made up 43% of iQiyi's revenues in 2018, with subscriptions at just 37%.The idea is that iQiyi will eventually have enough original content to be able to drive far more subscription revenue. At this point, iQiyi is spending nearly as much on content costs as it brings in in revenue. That's obviously not a sustainable model.The question is, will iQiyi be able to reach an inflection point where it starts earning a profit on its content? The fact that two well-funded rivals in Alibaba and Tencent oppose them make it very difficult to either lock up the market or raise prices aggressively. IQ Stock VerdictIf iQiyi can stay the course for quite a few years, it can become a huge winner. It trades far cheaper than Netflix and other streaming companies on a Price/Sales basis. The combination of aggressive revenue growth and an expanding valuation multiple could make IQ stock a home run.But it will be many years, if ever, until iQiyi reaches that point. Right now, the business is losing gushers of money. That's problematic as it faces entrenched rivals. How long will investors fund iQiyi's money-burning content strategy? If the company can keep adding subscribers quickly, IQ stock will eventually recover. But there's a decent chance it will continue to struggle for a long time to come.At the time of this writing, Ian Bezek held no positions in any of the aforementioned securities. You can reach him on Twitter at @irbezek. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Best Stocks for 2019: A Volatile First Half * 7 Simple Ways for Young Investors to Invest Their First $1,000 * 6 Stocks to Buy Based on Insider Buying The post Right Now the Future Looks Pretty Bleak for IQ Stock appeared first on InvestorPlace.
Over the past few months, the stock price of Alibaba (NYSE:BABA), one of the most important Chinese companies to be listed on U.S. exchanges, has been extremely choppy as the rhetoric on U.S.-China trade issues has become the elephant in the room.Source: Shutterstock It's probably the understatement of the past 12 months to say that the trade war between the U.S. and China have brought significant uncertainty to the global stock markets. As a result, most Chinese stocks are currently much cheaper than they were a year ago.Now that the meeting between President Donald Trump and the Chinese President Xi Jinping at the G20 summit is over, investors will turn their attention to the Federal Reserve's interest rate decision as well as the upcoming earnings releases by many tech heavyweights. Therefore, the recent volatility we have experienced, especially in the tech sector, is likely to stay with us for a while.InvestorPlace - Stock Market News, Stock Advice & Trading TipsToday let us discuss BABA stock in light of the developments in China as well as South and South East Asia. The Chinese Economy Is Growing and EvolvingOver the past two decades, Alibaba has become a highly regarded global company, and BABA stock offers U.S. investors the chance to invest in the growing Chinese consumer and e-commerce markets.Although the Chinese economy may slow down in 2019 or even 2020, its GDP is still expanding at an average annual rate of 6% minimum. This growth is indeed faster than almost any other major economy in the world. With a population of almost 1.4 billion people, China's economic growth is still in its early stages and the Chinese middle class is likely to expand for a long time. * 10 Best Stocks for 2019: A Volatile First Half About 20% of the country's retail purchases are made online. In 2018, the online retail sales of goods and services was over $1.3 billion, up by 23.9% year-on-year (YoY). Readers who are interested in various statistics on China may want to refer to the website of the National Bureau of Statistics of China.In other words, China's growing middle class will continue to drive increases in the country's consumer spending. And when average Chinese citizens have more money in their pockets, more of it can be spent on online shopping sites like Alibaba, which itself is a good proxy for levels of retail spending in China.Furthermore, many analysts believe that BABA stock's bottom line is not going to be too adversely affected by current trade wars, as its business model is tied to China directly, decreasing the long-term risks of bi-party trade wars.This fact may indeed be important for long-term Alibaba shareholders, as in general the trade war has had a negative impact on investor sentiment as well as on the prices of many tech stocks. After all, the U.S. is still China's biggest trading partner, as it buys almost one-fifth of its exports.As weeks go by, not many analysts believe that the U.S. and China are likely to conclude a comprehensive trade agreement soon. The negotiations may well drag out right up to the U.S. presidential elections.Yet, BABA stock may prove quite resilient to further news on the trade disputes, especially as one headline is usually reversed in a few days by usually an opposite headline. Alibaba's management has also downplayed the potential adverse effects of the trade war on BABA stock. Soon, markets may stop caring much about the news on the trade rhetoric. How Does Alibaba Stock Make Money?Alibaba is expected to release its next earnings statement on Aug. 22.When BABA stock released its most recent quarterly results on May 15, both sales and earnings exceeded estimates. Total revenue came at $56.1 billion, an increase of 51% YoY. On the bottom line, BABA stock grew adjusted net income by 12%. In fiscal 2020, management expects Alibaba's revenue to top $72 billion, a 33% YoY growth.In the most recent quarterly statement, analysts have paid attention to four main areas: * Core commerce (BABA's largest segment, whose revenue grew 54% YoY); * Cloud computing (revenue soared soared 76% YoY); * Digital media and entertainment (revenue increased 8% YOY); and * Innovation initiatives (revenue jumped 22% YOY).Despite the company's dominance in the Chinese e-commerce space, Alibaba is also rapidly expanding into many other lucrative industries aside from consumer products and retail. These segments include cloud computing infrastructure (i.e., Alibaba Cloud), digital payments (i.e., Ant Financial Services Group), online entertainment (i.e., Youku Tudou and Alibaba Pictures), and food delivery (i.e., Alibaba Local Services Company which is a merger between Ele.me and Koubei).Alibaba also owns over 31% of Weibo (NASDAQ:WB), the Chinese microblogging company. Chinese internet celebrity (better known as "wanghong") accounts at Weibo, and the website's rich multimedia functionalities help make WB a much-loved and somewhat indispensable social media company within China. Furthermore, WB's recent investments in live video streaming and fintech have already started contributing to the bottom line.Although many analysts have expressed growth concerns regarding China in the coming quarters, the country's economic fundamentals have vastly improved over the past decade. The internet population is still booming and money continues to pour into Chinese companies operating in this space -- factors that help support the long-term durability of BABA stock. BABA Stock Has Robust FundamentalsAlibaba has been branching out into other business ventures, and this expansion has been made possibly partly by its steady free cash flow (FCF), which measures a company's ability to produce cash. Investors care a lot about FCF, as it can be used in a discretionary manner. For example, BABA has used its FCF to invest in growth opportunities and strengthen its balance sheet further.Therefore on Aug. 22, Wall Street is likely to analyze the company's cash position closely. Many analysts expect Alibaba's revenue to continue growing by double-digit-percentage rates.In general, Alibaba's management does not provide any earnings guidance for future quarters. But there is general consensus that BABA's top line can increase at an average annual rate of 20%, through both organic growth and acquisitions. That would be an impressive growth rate for a company with a market cap of $452 billion.Another metric to pay attention to in August is Alibaba's operating margin, which stood at roughly 18% as of the end of the first quarter. Over the years, BABA's high operating margin has contributed to its profitability, which has been even higher than that of Amazon (NASDAQ:AMZN).However, investors are concerned that Alibaba's profit margins are decreasing. In fact, they are at their lowest levels since the company went public in September 2014. The group's various investments in especially cloud, digital media and food delivery have been pressuring profits. Although these new ventures help BABA expand its ecosystem, they also weigh on the stock's profitability, as these other segments are not yet profitable. The current profit margin stands at 27.7%. Alibaba Stock Is a Leader in E-CommerceAt present, the company's share of the Chinese e-commerce space is over 55% and BABA's core business of online retail contributes to about 85% of revenues.In comparison, Alibaba's closest rival, JD.com (NASDAQ:JD), has about 16% share of the Chinese e-commerce space. On the other hand, in 2018, Amazon's share of online retail marketplace was less than 1%; as a result Amazon is now closing down its Chinese online market.BABA operates through three main ecommerce sites -- Taobao, a Chinese online shopping website; Tmall, a Chinese-language website for business-to-consumer online retail; and Alibaba.com, the group's international trade site. The three sites have hundreds of millions of users globally and host millions of businesses.Alibaba's mobile Monthly Active Users (MAUs) on its e-commerce platforms is now 721 million. Alibaba's core business of e-commerce is highly profitable, as it charges a commission on items sold. The group also sells advertising on its platforms.Alibaba uses Gross Merchandise Volume (GMV) to measure total sales transacted through its platforms. For fiscal 2019, Alibaba's commerce business generated $853 billion in GMV, especially led by the Tmall retail marketplace. GMV on Tmall and Taobao have also increased by 31% and 19%, respectively.It is important to remind our readers that many U.S. companies already use Alibaba's platforms to reach consumers in China, a market that's competitive yet attractive. And the group is aiming to increase its reach further and have more American business list their products on the company platforms. When Alibaba reports in August, BABA shareholders will be interested to analyze the corresponding MAU and GMV numbers.Earlier in 2019, the International Monetary Fund (IMF) warned that China, the world's second-biggest economy, is likely to be slowing down in the rest of the year. However, the e-commerce market in China is still forecast to almost double within the next four years to reach $1.8 trillion. Therefore, even if the Chinese economic growth pauses for a few quarters to come, the country's growth potential is intact.In other words, a potential cooling off in China shouldn't get in the way of a sensible, long-term investing strategy, which BABA stock may offer shareholders. BABA's Cloud Segment Is GrowingWith a population of nearly 1.4 billion people, China is the largest country in the world. A rising middle class leads to higher consumerism, and that bodes well for many industries in China. One of those industries set to benefit is cloud computing.Alibaba's concentrated push deeper into cloud computing is increasingly being compared to the success of Amazon's cloud business. Alibaba Cloud is now the market leader in Asia.On May 15, when BABA released its quarterly results, both sales and earnings exceeded estimates. Investors cheered that BABA's cloud computing revenue soared 76% YoY.Alibaba has over 40% of the public cloud market in China. The market share of Tencent Holdings (OTCMKTS:TCEHY), its biggest competitor, is about 11%.As a result of increased diversification as well as the growth in the cloud space, Alibaba's total revenue is expected to grow by double-digit-percentage rates. Such a growth rate would indeed be impressive for a company with a market cap of $415 billion.Alibaba is now offering data analytics services to third-party businesses through A100, which integrates consumer shopping data into merchants' other services. The data is also becoming increasingly personalized through the use of artificial intelligence (AI). For example, Nestle (OTCMKTS:NSRGY) and Starbucks (NASDAQ:SBUX) have already started using this data analytics service offered by A100. Other merchants have started linking facial-recognition data to A100 so that they can offer personalized solutions to customers as soon as they enter the store. Ant Financial and Alibaba's Fintech EcosystemThe global payments industry is a $100 trillion plus market. And the financial technology (fintech) apps revolution is quickly changing the way traditional banks, credit-card issuers and mobile-payments companies work with businesses as well as their retail customers.Ant Financial Services Group, formerly know as Alipay, is Alibaba's mobile and online payment platform. Alibaba has a 33% stake in Ant Financial, which is an extremely popular mobile payment platform throughout China.The company processes payments between any two users. It further offers a wide range of financial services, such as insurance, credit, loans, credit scoring, and wealth management.China is witnessing the tremendous growth of fintech. At present, Ant Financial and Tencent, Alibaba's biggest rival in this sphere, control about 90% of China's payments market.Ant Financial has now become a powerhouse which many analysts expect may itself become a publicly listed company. The group is valued at over $150 billion.To put it into perspective for our readers, the market caps of Goldman Sachs (NYSE:GS) and JPMorgan (NYSE:JPM) are about $75 billion and $366 billion respectively. Alibaba Is Growing InternationallyFinally, forward-looking investors may want to pay attention to BABA's international growth numbers, too. Currently, more than 90% of the e-commerce giant's sales are made in China. But BABA has investments in start-ups in South Asia and Southeast Asia, too.Southeast Asia is en route to becoming the world's fourth-largest economic region by GDP, and analysts expect its e-commerce sector to expand tremendously within the next decade. Higher incomes and rising internet penetration rates are likely to strengthen these regions' e-commerce markets.Among the start-ups in those regions in which BABA has stakes are Paytm, an Indian digital-payments provider, and Lazada, a Singapore-based e-commerce company that is growing in overseas markets.Aibaba's focus on India is an area that investors may want to pay attention to for the long run. Globally, India is the fastest growing e-commerce market where the annual growth rate is about 50%. Increased smartphone usage as well as advances in delivery infrastructure and logistics are contributing to the increase in revenue. In addition to Paytm, Alibaba has also invested in Big Basket and Zomato in India.BABA is also looking to partner with European companies. Many European companies are still discovering new ways to enter the Chinese market, and BABA may enable them to connect with Chinese customers faster. Ant Financial is also seeking to expand in Europe.The "Amazon of the East" has also set its eyes on moving west through partnerships with European companies, including Vodafone Group (NASDAQ:VOD) in Germany and El Corte Ingles in Spain.International growth will not only help increase the company's bottom line, but it will also enable BABA to diversify away from China, lowering the country-specific macro risk of Alibaba stock. BABA Stock's Upcoming Listing in Hong KongBy the end of year, Alibaba is possibly going to Hong Kong for a second listing. There the company is expected to raise $20 billion.BABA had delisted from Hong Kong in June 2012. Now there is speculation as to why the company wants to move closer to China in a second listing and raise cash. Both the bulls and the bears are debating Alibaba's motives.Is it because BABA management is worried about the trade wars? Can BABA's second listing encourage more Chinese companies to follow Alibaba to Hong Kong? Does Alibaba need the cash for reasons investors do not know yet? Should investors therefore be worried?The exact result of this listing is still hard to pin down. For example, Alibaba has recently announced a one-to-eight stock split. A lower price may lure more Hong Kong-based investors into buying Alibaba stock.However, we do not know how its U.S. shareholders may react. One thing we can probably count on, though, is increased volatility in BABA stock price. Short-Term Technical Analysis for BABA StockAs a result of the impressive run-up of Alibaba stock since early June, BABA's short-term technical indicators have become overextended. Therefore, in July BABA stock has been impacted by profit-taking as it heads into its earnings report season.In the next few weeks, I do not expect BABA stock to regain its recent high of $195.72, which was last seen on May 3. At this point, bulls are not yet in control. Therefore Alibaba shares will need a strong catalyst to make them attractive in the eyes of long-term investors. Instead, depending on headlines regarding the U.S.-China trade war or the interest rate decision by the Fed, I expect BABA stock to trade between $155 and $175.In other words, at the current price of about $167, I find the risk/reward ratio on the long side inadequate. I would not advocate bottom-picking in case of near-term price weakness, but I'd be ready to start building a position around $155 later in the summer.It's almost impossible to time a top and a bottom in the markets. Those who bought at about $195 in early May might not be too happy, but investors who had the courage to step in at the end of 2018 or on the last day of May 2019 are in pretty good shape.If you are an investor with paper profits, maybe you should consider locking in some of those gains now. That said, if you are worried about profit-taking in the short term , then within the parameters of your portfolio allocation and risk/return profile, to protect your profits to date, you may consider placing a stop-loss at about 3%-5% below the current price point.In case of a potential profit taking, short-term moving averages and oscillators would move toward a more neutral reading from the overbought levels we are currently seeing. And long-term investors may prefer to open up positions then.In other words, if you are not yet a shareholder of BABA stock, you may want to wait on the sidelines until you have had a chance to analyze the earnings results.If you already own BABA shares, you may consider hedging your position with at-the-money (ATM) covered calls with Aug. 16 or Sept. 20 expiry.The volatility of Alibaba stock is high, giving it a broad trading range, so short-term traders should proceed with caution. BABA Stock's PEG RatioIn addition to looking at technical analysis charts, I keep an eye on stocks' Price/Earnings to Growth (PEG) ratio. A PEG ratio of one means the market's perceived value of the stock is equal to its anticipated future earnings growth. For example, if a stock had a P/E ratio of 25, and the company's projected earnings growth was 25%, then the PEG ratio would be one.With the PEG number, investors can compare and contrast the relative value of a stock against other stocks. I also compare the change in PEG with the change in a stock's price within a given time-frame to gauge investor sentiment regarding a stock's potential price increase.In 2019, Alibaba stock is up over 20%. Given BABA's current level of earnings growth, Alibaba's PEG of 1.33 is currently high from my perspective. In other words, I regard BABA's stock price of about $167 as somewhat over-stretched. However, please remember that the PEG ratio is just one tool in investors' arsenal. The Bottom Line on BABA StockAlibaba stock offers U.S. investors the chance to invest in the growing Chinese consumer and e-commerce markets. As the company's second decade ends, it is increasingly focusing on becoming a social hub. Alibaba's growth in e-commerce, cloud computing and other investments throughout China and globally make it a disruptor and a sound long-term investment.BABA stock is a fundamentally sound stalwart investment in China as well as in the neighboring regions with further growth prospects, profitability, leadership, stability and proactive management -- factors that are likely to translate into a strong balance sheet and robust bottom line in the rest of the decade.I also believe that most of the negative effects of the U.S.-China trade war have already been priced into Alibaba stock. If the two sides reach a deal that's seen in a positive light this year, BABA stock is likely to rally.The month of June has given Wall Street a glimpse of how powerful BABA's comeback could be: the stock rallied from an intraday low of $147.95 on May 31 to an intraday high of $177.95 on July 1.Therefore long-term investors should possibly view any decline in BABA stock as a good opportunity to get into Alibaba shares. However, traders with a short-term horizon should remember that there might be some profit-taking in the stock ahead of BABA's earnings in August.Investors who are interested in buying into Chinese companies, but do not want to commit all their capital to a single stock such as Alibaba may also consider investing in various exchange-traded Funds (ETFs) that have BABA as a holding, including iShares MSCI China ETF (NASDAQ:MCHI), KraneShares CSI China Internet ETF(NYSEARCA:KWEB) or iShares Core MSCI Emerging Markets ETF (NYSEARCA:IEMG).As of this writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Best Stocks for 2019: A Volatile First Half * 7 Simple Ways for Young Investors to Invest Their First $1,000 * 6 Stocks to Buy Based on Insider Buying The post Alibaba Stock Is Riding High on Growth in Cloud, Global Operations appeared first on InvestorPlace.
The second quarter of 2019 has ended and that means we're at the halfway point in the Best Stocks for 2019 contest.Over the last three months, trade-war headlines and Federal Trade Commission announcements kept the markets interesting to say the least. But the S&P 500 and Dow are making new all-time highs, and the Nasdaq is close to doing the same.In the Best Stocks contest, we had wild swings as marijuana stocks briefly fell out of favor and the trade war hit some stocks more than others. While the stock that finished in first place clearly broke away from the pack, the race was tight between second and fifth places.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 A-Rated Stocks to Buy for the Rest of 2019 So without further ado, let's take a look at how each of the Best Stocks' competitors did in Q2. Syrah Resources (SYAAF)Investor: Eric Fry Year-to-Date Change Through Q2: -40%Syrah Resources (OTCMKTS:SYAAF) is an all-in bet on the electric vehicle revolution -- and revolution hasn't come just yet. No matter which auto company ends up dominant and which battery they use, the anode on these batteries must be graphite. And SYAAF holds the largest graphite mine in the world.Right now, however, Syrah is cash flow-negative and the current demand for graphite isn't enough to drive it.But Eric Fry points out two positives:* "Syrah has been narrowing its operating losses, mostly by mining its graphite more efficiently … Quarterly cash-flow from operations has improved from a low of -$41 million in September 2016 to -$8 million in the most recent quarter. But a minus sign is still not a plus sign.* SYAAF is in the process of issuing new debt and equity to raise an additional $78 million. But this new cash isn't coming cheap. In order to attract these funds, the company is issuing stock at 56 cents a share -- a steep 20% discount to where the stock was trading before the company announced this financing."However, the stock has one thing going for it in this contest. As of this writing, SYAAF trades at just 61 cents and has a market cap of $213 million. And the best stocks for 2019 contest counts percent gained. That means less is needed to move the needle here than with other stocks on this list -- namely the Reader's Choice.Read more about SYAAF from Eric Fry here. Weibo (WB)Source: Shutterstock Investor: Kyle WoodleyYTD Change: -28%Those who follow the markets even casually won't need an explanation for a nearly 35% drop in a Chinese stock over the last three months. Of course it was the trade war.Weibo (NASDAQ:WB), the Chinese microblogging platform, has little to do with trade between the U.S. and China. But it has been caught in the crossfire nonetheless.As Investorplace's Luke Lango writes:"Broadly speaking, Weibo is China's Twitter (NYSE:TWTR). But, Wiebo has more users than Twitter, is more profitable than Twitter, and is growing more quickly than Twitter. Despite all that, Weibo has a market cap about half that of Twitter. Why? ARPU rates. Weibo monetizes its users less than Twitter. This is just a time issue."WB's growth -- particularly when it comes to digital ads -- has stalled out as a result of the macro concerns surrounding the Chinese economy, largely as a result of the trade war.Weibo reported earnings of 56 cents and revenues of $399 million for the first quarter, both beating expectations and showing large amounts of growth from the year-ago quarter. But WB fell on lowered Q2 guidance. * The 7 Top Small-Cap Stocks Of 2019 So WB stock's outlook for the second half largely depends on the trade war. If it continues, the stock will likely stall out, but if an agreement is finally reached, look for a nice pop in the price. Canada Goose (GOOS)Source: Shutterstock Investor: Will AshworthYTD Change: -11%Canada Goose (NYSE:GOOS) had posted at 10% YTD gain by the end of Q1, and it has now swung just as far in the opposite direction. The main culprit? A May 29 earnings report that showed the clothing brand's explosive growth is finally slowing.But InvestorPlace's Will Ashworth thinks that this slowing growth is not only okay, it's inevitable:"Canada Goose, like all growth stocks, is moving through a transitional period, where it goes from the 'It' brand to something more sustainable with the corporate infrastructure in place to meet the increased demand. "With the shock of slowing growth already priced into GOOS stock, the second half should hold more gains as margins improve and the company's expansion into China continues to take hold.Read more about GOOS from Will Ashworth here. LyondellBasell (LYB)Source: Via LyondellBasellInvestor: Charles SizemoreYTD Change: 3.7%LyondellBasell (NYSE:LYB) has jumped from 9th place to 7th over the course of Q2. With a gain of just 3.7% YTD, this just goes to show the current volatility of the market. So what happened for LYB this quarter?First, and best for LYB stock price, LyondellBasell walked away from a merger with Brazilian chemical company Braskem in early June. Shares ripped higher on the news. LYB shares hit a multi-year low on May 31, and gained 16% in the month of June.Is there more growth ahead for LYB? It's a plastics company, so it's rightfully under increased scrutiny and regulation when it comes to environmental impact. But Sizemore believes LYB is positioning itself well for a more environmentally conscious world:"LYB is not quietly waiting for its business to be regulated into extinction. The company recently announced a partnership with Finnish refiner Neste to begin commercial-scale production of bio-based plastic from renewable materials, and the company has numerous other green initiatives. Environmentalists may never love the company. But LYB is giving fewer reasons to hate it with every passing day." * 7 Value Stocks to Buy for the Second Half LyondellBassell also has a dividend payout of 4.8%. The higher yield is at least partially attributable to stock price, the company has steadily increased its dividend since its introduction seven years ago and still has a low payout ratio of just 36%.Read more about LYB from Charles Sizemore here. Viper Energy Partners (VNOM)Source: Shutterstock Investor: Neil GeorgeYTD Change: 21%Petroleum-company landlord Viper Energy Partners (NASDAQ:VNOM) has fallen from third place to sixth over Q2. This isn't great. But since VNOM is a property holder, not directly a petroleum producer, it misses a lot of highs and lows of the industry.Consider Diamondback Energy (NASDAQ:FANG), which originally set up the company. It's stock chart for the year looks more like a rollercoaster than most stocks described as such -- and it's only up 16% in the first half. If you're looking for a thrill ride, go with a more traditional petroleum play, but if you're looking for an investment, VNOM is safer, albeit less exciting. Neil George writes:"Petroleum prices never, ever keep going in one direction for long. There is a constant flow of supply and demand estimates and news and analysis that send prices for crude oil and natural gas up or down day by day and week by week … So, zero or infinity pricing just isn't in the cards for petroleum products. Rather than placing bets on oil soaring or plummeting, I've focused primarily for the longer-term on companies that go about their businesses whether crude oil prices are popping or dropping".George also points out that at current prices, VNOM is cheap. It trades at just 2.37 book value. VNOM also has a dividend yield just below 5%, which is incredible for a stock that's doubled in value since just June 2017.VNOM may have fallen this quarter, but it definitely still has the potential to take the crown.Read more about VNOM from Neil George here. Amazon (AMZN)Source: Shutterstock Investor: Readers' ChoiceYTD Change: 29%Readers' Choice stock Amazon (NASDAQ:AMZN) waned in the last few days of Q2. When I wrote the update on June 26, the e-commerce giant was a hair's breadth from second place, but it ultimately finished the first half in fifth. That just shows the close nature of the Best Stocks for 2019 contest.Readers don't need to wonder if Amazon has more to come in 2019. It's Amazon, of course it does. Next week, Amazon has its now two-day long Prime Day. Last year, AMZN sold $1 billion worth of profits in 36 hours with a site outage.Furthermore, the company's famous two-day Prime shipping is being cut to one day. The initial cost will hit Amazon's profit in the Q2 report, but the move should further establish dominance for the company over Walmart (NYSE:WMT), Target (NYSE:TGT) and other traditional brick-and-mortar retailers.Of course the threat of government regulation looms large, especially when President Donald Trump targets Amazon by name at random. But will the current government manage to enact any regulation in the next two quarters? How efficiently has the current administration accomplished other pet projects for the president? * 7 Retail Stocks to Buy That Are Down in 2019 Regardless of whether regulation comes this year, next year, or in a future presidential administration, the back half of 2019 is unlikely to be boring for AMZN stock.Read more about Reader's Choice AMZN here. Adobe (ADBE)Source: Shutterstock Investors: John Jagerson and Wade HansenYTD Change: 33%After holding the second spot for some time, software company Adobe (NASDAQ:ADBE) finished the quarter in fourth. John Jagerson and Wade Hansen still believe ADBE stock is undervalued based on its fundamentals.Over the past few years, Adobe has been shifting most of its software to a subscription model, which has done wonders for ADBE's top and bottom lines. But as John and Wade said:"Revenue and EPS have been rising with the stock's price, but its earnings multiple remains near historical lows … The point behind a value-price comparison like this is to determine if investors are paying more, or less, for each dollar of earnings than they have in the past. Because growth is still strong, paying less for the stock now indicates the likely probability that the shares are still undervalued."This means there's likely more growth ahead for ADBE stock. But will it be enough to beat out the competition?Read more about ADBE from John and Wade here. Teladoc (TDOC)Source: MayApps207 via WikiMedia Investor: Jason MoserYTD Change: 40%Teladoc (NYSE:TDOC) made a last-minute sprint for third place as the first half drew to a close. TDOC rallied 10% in the last three sessions of June, winning the tight race for third among ADBE and AMZN.Teladoc reported some great Q1 earnings and crossed 1 million doctor's visits for the first time, despite a weaker flu season. This company specializes in telehealth, or remote doctors' visits and other healthcare services. This places it at the forefront of the evolving healthcare industry, and its explosive growth shows that."The business is still unprofitable but what else is new? Profitability will come in time and management reiterates that the company will be cash flow positive for the first time in 2019 so we'll hold them to that target," wrote Jason Moser of The Motley Fool. * 10 Best S&P 500 Stocks to Buy For the Rest of 2019 TDOC has a growing business and investors are excited about it. Moser also anticipates additional partnerships with more traditional healthcare companies to be announced in the remainder of the year, meaning there's likely share price growth ahead as well.Read more about TDOC from Jason Moser here. Lululemon (LULU)Source: Shutterstock Investor: Louis NavellierYTD Change: 52%In Q2, the race was close … for second place. Lululemon (NASDAQ:LULU) was previously in first.The athleisure company, which Louis Navallier called "the North Star of retail clothing stocks," reported a remarkable double-beat-and-raise Q1 that showed the company is still growing -- and fast. The company also reported same-store sales of 14% compared to the expected 11.6%.Navellier cautioned that the ongoing trade war could lead to disappointing Q2 earnings for LULU, but also talked about many upcoming growth areas for the company:"LULU is now in expansion mode. It has built out its e-commerce business and is expanding its brick and mortar presence.Along with that expansion Lululemon has begun to offer yoga classes in some stores. It also keeps a tight rein on its brand, so it has complete control of its margins. This is one of the secrets of its success.Lululemon has even expanded its brand to include men's and children's lines as well. It has also launched a membership program that's still in beta testing, and just this week announced that it's going to begin a line of personal care products with Sephora."Can LULU reclaim the top spot? Definitely.Read more about LULU from Louis Navellier here. Charlotte's Web Holdings (CWBHF)Investor: Matt McCallYTD Change: 71%A 71% gain for a stock at the halfway point doesn't seem disappointing -- unless the stock was up 81% at the end of Q1. This is the case for Charlotte's Web holdings (OTCMKTS:CWBHF). But, as Matt McCall wrote, marijuana isn't just the hot sector of the moment, it's a sector at the beginning of a long-term growth narrative."Interest in sectors and asset classes ebbs and flows, and because the marijuana industry has been flying so high in recent months, we were overdue for a short-term correction.We're seeing that now. But don't make the same mistake a lot of people are making. Don't sell your holdings because some idiot tells you 'the marijuana bubble has popped.'Instead, focus on the long-term picture."A number of things happened in Q2 that should help CWBHF in Q3. The company named a new CEO, Adrienne Elsner, a former Kellog's (NYSE:K) executive. As McCall pointed out, her former position will help Charlotte's Web focus more on branding going forward. In Canada, CWBHF is now trading on the Toronto Stock Exchange. The next stop is the Nasdaq or New York Stock Exchange.In the days since Q2 ended, CWBHF has already reclaimed the top slot, meaning this is definitely one to watch for the rest of the year.Read more about CWBHF from Matt McCall here.As of this writing, Regina Borsellino held no positions in the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 A-Rated Stocks to Buy for the Rest of 2019 * 7 Education Stocks to Buy for the Future of Academia * 5 Stocks to Buy as You Rebalance Your Portfolio The post 10 Best Stocks for 2019: A Volatile First Half appeared first on InvestorPlace.
Many investors are still learning about the various metrics that can be useful when analysing a stock. This article is...
Down 5% in the last year and trading at a forward price-earnings ratio of about 20, Alibaba (NYSE:BABA) has been hurt by the U.S.-China trade war and uncertainty about China's economic outlook. As those fears clear, though Alibaba stock will regain its shine.Source: Charles Chan Via FlickrNow that Washington and Beijing have reached a trade-war truce and China has introduced an economic stimulus, fears about macro issues derailing Alibaba stock should recede.Moreover, BABA stock has multiple other positive catalysts that should drive BABA stock price higher over the medium-to-long-term.InvestorPlace - Stock Market News, Stock Advice & Trading TipsHere is a list of the four most important positive catalysts of Alibaba stock. * 7 Retail Stocks to Buy That Are Down in 2019 1\. Positive Macro Trends and BABA StockAlthough my prediction about Presidents Trump and Xi reaching a comprehensive trade deal at the G20 meeting turned out to be off the mark, the two leaders did agree to a truce that will include new talks.Additionally, America's took its threatened, new tariffs off the table for now, and Trump decided to allow American tech companies to resume selling technology to a key Chinese tech firm, Huawei.Moreover, Trump said the two sides are "back on track." That indicates Xi agreed to reinstate the concessions that Beijing had, according to Washington, previously made, and then reneged on.Since Treasury Secretary Steve Mnuchin indicated last week that the two sides had been "90%" of the way to a deal following China's concessions, I remain convinced that the countries will reach a comprehensive trade agreement sooner rather than later.In the wake of a trade deal, investors would become much less worried about a collapse of China's economy. Consequently, Alibaba stock should rise.But even if I'm wrong and a trade deal doesn't get done soon, China's recently unveiled economic stimulus appears to be strong enough to compensate for much of the impact of the trade war, at least for a while. 2\. Digital Ad Spending Can Lift BABA stockAccording to eMarketer, China's digital ad spending is expected to climb 22% this year and 18.5% next year. In 2020, it's expected to reach nearly $95 billion, and in 2023 it's forecast to be worth $134 billion. Like its U.S. counterpart, Amazon.com (NASDAQ:AMZN), BABA is generating a great deal of ad revenue.Alibaba's digital ad revenue is expected to be $27 billion this year and $33 billion in 2020, eMarketer predicted. The latter figure is a significant 7% of the current market cap of BABA stock.Alibaba's ad revenue is likely to climb meaningfully in subsequent years as China's digital ad sales continue to rise significantly. And interestingly, Alibaba's digital ad revenue is expected to be more than three times higher than of AMZN this year. 3\. Alibaba's Domestic InvestmentsThose who are bearish on BABA stock often deride the company's investments as wasteful and unprofitable. However, most of the company's domestic investments clearly benefit its core ecommerce business.For example, its stake in highly popular social media company Weibo (NASDAQ:WB) allows its "ecommerce and mobile payment features" to be "integrated" into Weibo's platform.BABA's digital media investments also enable it to attract more users to its site and ecosystem through ads and attractive content. Likewise, its investments in logistics companies, digital payment companies, and lenders have made its ecosystem increasingly "sticky" and attractive for buyers and sellers.Driven by its investments and acquisitions, as well as its powerful AI tools, BABA's strong ecosystem will enable its core ecommerce business to keep growing rapidly and remain profitable as China's middle class expands further. 4\. Alibaba's Foreign InvestmentsAlibaba subsidiary Lazada Group is reportedly Southeast Asia's ecommerce leader and the region's overall ecommerce sales are expected to climb to about $178 billion by 2025. That sounds like a tremendous profit opportunity for BABA and, consequently, a huge, potential catalyst for Alibaba stock.India's GDP is expected to grow more quickly than that of China this year, and the compound annual growth rate of the country's ecommerce sales from 2013 to 2017 was a staggering 53%, although it's expected to slow to a still-impressive 35% through 2022.As Seeking Alpha columnist Skylar Florian pointed out, BABA's strong ecosystem and multiple partnerships in India leave it very well-positioned to succeed in the huge, quickly growing economy.Finally, Alibaba's cloud revenue continues to grow by leaps and bounds, as the unit's revenue jumped 76% year-over-year in BABA's fourth quarter which ended in March. The company's cloud business is also closing in on profitability, as its adjusted EBIDTA fell just 2% year-over-year last quarter.As more and more Chinese companies join the cloud over the next few years, the business should become a meaningful profit center of the company and a significant driver of Alibaba stock.As of this writing, the author owned shares of Weibo stock. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Retail Stocks to Buy That Are Down in 2019 * 7 of the Best SPDR ETFs -- Besides SPY and GLD * 5 Dividend Stocks to Buy From Across the Globe The post Four Reasons It Still Is an Excellent Idea to Buy Alibaba Stock appeared first on InvestorPlace.
The People's Liberation Army's Hong Kong garrison carried out a patrol exercise last week to improve readiness for "emergency dispatches", official newspaper PLA Daily reported on Tuesday.Although the exercises were staged last Wednesday, the military newspaper only reported the drill on Tuesday. That was a day after Hong Kong was rocked by violent protests in which the Legislative Council building was stormed and vandalised by activists demanding the government withdraw an extradition bill that would allow the transfer of fugitives to mainland China."On June 26, the army, navy and air force of the PLA garrison in Hong Kong took part in a joint naval and air patrol exercise in areas near Hong Kong," the report said. "The focus [of the exercise] was on reviewing and raising the units' combat abilities in emergency dispatches, ad hoc deployment and joint operations."The report, which was posted on the newspaper's account on microblog site Weibo, did not give details such as how many troops were involved, but it included photographs of Chinese soldiers with automatic rifles, a PLA helicopter and warships.Soldiers are seen with automatic rifles during the exercise in Hong Kong. Photo: Weibo alt=Soldiers are seen with automatic rifles during the exercise in Hong Kong. Photo: WeiboAfter the chaotic and violent scenes of Monday " the day the city marked the anniversary of its return to Chinese rule " the Hong Kong and Macau Affairs Office, the central government's liaison office and the foreign ministry all issued statements saying that Beijing supported Hong Kong police in handling "the incidents in accordance with the law".Public security matters are handled by local police in Hong Kong under the Basic Law, the city's mini-constitution.The timing of the newspaper's report was aimed at sending a subtle warning against "foreign interference in Hong Kong's affairs", according to a mainland Chinese official, who requested anonymity."The garrison holds such exercises regularly but the newspaper chose to publish details of these activities [on Tuesday] because it wants to tell the outside world that this is a sovereignty issue for China," the source said.The report did not say how many troops were involved in the drill. Photo: Weibo alt=The report did not say how many troops were involved in the drill. Photo: WeiboBut military analysts said the message was not so subtle."The drill happened almost a week ago and the PLA could have kept it quiet and not reported it. But instead they chose to publish it [on Tuesday] because the PLA wanted to flex its muscles," Beijing-based military expert Zhou Chenming said."The goal is very clear " the central government hopes that [by flexing its muscles], the ongoing dispute over the extradition bill will quiet down soon," he said.Analysts say the PLA chose to publish the report when it did to "flex its muscles". Photo: Weibo alt=Analysts say the PLA chose to publish the report when it did to "flex its muscles". Photo: WeiboMacau-based analyst Antony Wong Dong said the garrison's latest drill was similar to the anti-terrorism exercises that followed the Occupy Central protests in Hong Kong five years ago."It's predictable that the garrison would stage drills before or after the July 1 Hong Kong handover anniversary, just like their activities after Occupy Central," Wong said."But the PLA chose to announce this drill less than a day after the violent protests ... this appears to be a coordinated effort by Beijing to condemn the violence."Adam Ni, a researcher on Chinese foreign and security policy at the Australian National University, said publicising the exercises underscored Beijing's "carrot and stick" strategy for Hong Kong."It's ironic that on the one hand, the PLA opened its barracks [on the July 1 anniversary] to the Hong Kong public as a public relations exercise, and on the other it's sending out the blatant message about the use of force," Ni said."Basically it's a clear ultimate message that if the Hong Kong government is unable to deal with the social tensions, then in the end, the PLA would have to be used."Last August, the PLA's Hong Kong garrison held its biggest anti-terrorism drill in the city since 1997, involving five warships, four helicopters, an assault boat and dozens of soldiers, according to state news agency Xinhua.Additional reporting by William ZhengThis article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.
Hedge funds run by legendary names like George Soros and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the […]
In the latest trading session, Weibo Corporation (WB) closed at $43.55, marking a -0.8% move from the previous day.
(Bloomberg) -- Corporate debt, collateralized securities and even stocks may not sound like the sort of assets money managers would seek out for their haven qualities. Yet a slide in global bond yields is forcing investors to look outside of the usual refuges as they hunt for stable assets that provide at least a modicum of return.Gene Tannuzzo, who oversees the $4.8 billion Columbia Strategic Income Fund, says he’s adding investment-grade corporate bonds from Europe for the extra yield. Sarah Lange, a senior fixed-income portfolio manager at Pentegra, is “begrudgingly” seeking out asset-backed debt. Craig Pernick, the head of fixed income for Chevy Chase Trust Co., was even tempted recently by a non-convertible dollar bond from China’s Weibo Corp.“Everybody has their own definition of safe haven, and it seems people are loosening that definition in search of yield,” said Pernick, whose firm manages $30 billion in assets. The challenge these days is “not falling into the trap of changing strategy too much.”It’s the new reality for investors dealing with the fallout from dovish turns by central banks in the U.S. and Europe, which have pledged to act to ward off an economic slowdown and want to boost stubbornly low inflation toward their target levels. Money managers staring down 10-year Treasury yields around their lowest since 2016 and some $12.7 trillion of global negative-yielding debt that they’d have to actually pay for the privilege of owning are left with few options beyond easing their standards. As a result they’re turning to assets that might seem relatively riskier, but are potentially sheltered from global events while also offering extra yield.This year’s global bond rally broadly reflects persistently low inflation rates, investors’ expectations that a recession is on the horizon and the possibility that central banks may not be able to do enough to spark growth or consumer-price increases.But U.S. government bonds have gotten an extra boost from demand generated by the negative yields in Europe, according to Brett Wander, who oversees more than $190 billion in assets at Charles Schwab Investment Management in San Francisco. As of Thursday, the 2.01% payout on benchmark 10-year Treasuries was about 70 basis points above its record intraday low reached in 2016.Bank of America strategists are warning of the risks of “Japanification” of yield curves throughout much of the developed world, resulting from an extended period of subpar growth, slow inflation and low rates. That pattern already seems to be taking hold in Europe, and Bank of America sees a risk that yields will stay persistently low across much of the continent, as well as the U.S. and Japan.A world starved of yield “implies a tectonic shift in asset allocation,” with greater appetite for emerging-market investments, said Bruno Braizinha, BofA’s director of U.S. rates strategy.For Tannuzzo, deputy global head of fixed income at Columbia Threadneedle Investments in Minneapolis, finding a safe and positive-yielding investment means sorting through investment-grade corporate bonds in Europe. While the euro-denominated notes carry lower nominal yields than equivalent U.S. securities, he points out that they actually have better returns once factoring in the conversion to dollars.European corporate credit yields sank to a record low this week on a flood of demand from investors, but Tannuzzo sees them dropping even further if the European Central Bank begins purchasing more corporate bonds.At Pentegra, a White Plains, New York-based pension fund that manages $15 billion in assets, Lange said she favors out-of-the-mainstream choices in securitized products: “new issues, esoteric asset streams, private deals that won’t get a whole lot of publicity.”“I’m not quite a believer that we’re going to stay at these levels, at these low rates, but now I have to invest a little bit, but begrudgingly,” she said during a June 20 interview at a conference in Philadelphia. With a 10-year Treasury yield that has a better chance of getting to 1.25% than 2.40%, “I have to just throw in the towel and I have to start spending some of my cash.”Pernick of Chevy Chase Trust said he and his colleagues “spent a lot of time” this week looking at the five-year note from Weibo, a Chinese social media company, that yielded 1.725 percentage points over Treasuries as of Wednesday. “In the end, we just didn’t have the comfort level at that spread to add it,” he said. “The risk-reward was not there.”Guy Haselmann, chief executive officer of FETI Group LLC, says he’s hearing many portfolio managers rely on dividend-paying stocks as a form of fixed income. Indeed, the iShares U.S. Real Estate ETF, which carries an indicated yield of about 3.1%, saw its biggest inflow since February 2018 on Monday as investors put $294 million into the fund, according to data compiled by Bloomberg.Haselmann, whose Summit, New Jersey-based company works with managers to generate ideas, sees a revival of the TINA (“there is no alternative”) trade, which results in a less-than-ideal portfolio allocation usually made up of stocks because other asset classes offer worse returns.“What could go wrong?” he asks.(Updates fourth paragraph with amount of negative-yield bonds.)\--With assistance from Emily Barrett and Tasos Vossos.To contact the reporter on this story: Vivien Lou Chen in San Francisco at email@example.comTo contact the editors responsible for this story: Benjamin Purvis at firstname.lastname@example.org, Brendan Walsh, Mark TannenbaumFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
BEIJING, China, June 26, 2019 /PRNewswire/ -- Weibo Corporation ("Weibo" or the "Company") (WB), a leading social media in China, today announced the pricing of its public offering of US$800 million aggregate principal amount of its 3.500% notes due 2024. The notes have been registered under the U.S. Securities Act of 1933, as amended, and are expected to be listed on the Singapore Exchange Securities Trading Limited. The Company expects to receive net proceeds from the offering of approximately US$793 million, after deducting underwriting discounts and commissions and estimated offering expenses.
Moody's Investors Service has assigned a first-time Baa1 issuer rating to Weibo Corporation. At the same time, Moody's has assigned a Baa1 senior unsecured rating to the proposed USD notes to be issued by Weibo Corporation. "The Baa1 rating reflects Weibo's strong market position as the leading social media platform in China, and its ability to attract content providers, users, and advertisers, allowing it to capture an increasing share of the online advertising market," says Lina Choi, a Moody's Senior Vice President.
Wild price swings have swept across the major indexes this holiday season. Explore three high-beta stocks to trade the increased volatility.
Weibo Corporation (WB) closed at $43.03 in the latest trading session, marking a +1.92% move from the prior day.
BEIJING, June 20, 2019 /PRNewswire/ -- Weibo Corporation ("Weibo" or the "Company") (WB), a leading social media in China, today announced that it has filed an automatic shelf registration statement on Form F-3 with the United States Securities and Exchange Commission (the "SEC"), and a preliminary prospectus supplement under the registration statement, pursuant to which the Company proposes to sell senior notes. The Company intends to use the net proceeds from the offering for general corporate purposes. The sole bookrunner of the offering is Goldman Sachs (Asia) L.L.C.
Nik Wallenda is at it again. This weekend, Wallenda and his sister will be taking a 1,300 foot stroll across New York's Time Square. But this isn't just any stroll: They'll be walking 25 stories above the ground on a high wire, without harnesses or a net beneath them.
As an investor, I look for investments which does not compromise one fundamental factor for another. By this I mean, I...
Weibo Corp. (WB) has witnessed a significant price decline in the past four weeks, and is seeing negative earnings estimate revisions as well.
One of the biggest growth narratives this decade has been the rapid expansion, urbanization and digitization of China's economy. Put simply, China's middle class has rapidly expanded over the past several years. That growing middle class has simultaneously urbanized and digitized, creating a surge in demand for internet services and products, which has propelled China's digital economy to grow by leaps and bounds.A big part of this China internet growth narrative has been digital advertising. China's digital ad market has fired off 20%-plus growth year after 20%-plus growth year over the past several years, and the digital ad market has grown from a fraction of the total media landscape to account for the lion's share of media ad spend today. In 2018, digital ad spend represented 65% of total media ad spend in China. In the United States, digital ad share is below 50%.Thus, China's digital ad market has not only grown significantly over the past several years, but it has actually become more dominant than America's digital ad market.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut, at a 65% penetration rate and against the backdrop of economic weakness throughout China, cracks have started to form in China's digital ad market. Cracks may actually be an understatement here. While eMarketer is calling for another 20%-plus growth year in China's digital ad market, many Chinese digital ad players have been reporting flat growth in early 2019.The result? Multiple Chinese ad stocks have been in sell-off mode. * 7 A-Rated Stocks to Buy Under $10 Is this the end of the Chinese digital ad growth narrative? Which stocks have been impacted? Will they continue to head lower? Let's answer those questions by taking a looking at six Chinese ad stocks to sell after suffering from this slowdown. Baidu (BIDU)Source: Simone.Brunozzi Via Flickr% Off Highs: 60%YTD Return: -28%At the top of this list is one of China's most important and biggest digital ad players, Baidu (NASDAQ:BIDU).For all intents and purposes, Baidu is the Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) of China, as the company is behind China's most widely used internet search engine and has built a very big digital ad business on top of that search engine. But, that digital ad business has come to a screeching halt over the past few quarters. A year ago, Baidu's online marketing business grew revenues at a 23% year-over-year rate. Last quarter, the online marketing business reported just 3% year-over-year revenue growth.The slowdown has nothing to do with lower usage. Daily active users of Baidu App rose nearly 30% in the quarter. Instead, the slowdown has everything to do with China's digital ad market slowing as China's economy has likewise slowed over the past several quarters. So long as this broader economic slowdown persists, which it will so long as trade tensions hang around, then China's digital ad market will continue to slow, too, as will Baidu's core advertising business.To be sure, there are other growth levers here that Baidu can pull and is pulling to keep revenue growth respectable, including smart home, cloud and streaming. But, until the core ad business gets back on track, BIDU stock won't bounce back. Weibo (WB)Source: Shutterstock % Off Highs: 70%YTD Return: -25%Once one of China's highest flying digital ad stocks, Weibo (NASDAQ:WB) has since turned into one of China's worst performing U.S. listed stocks.Much like Baidu is the Alphabet of China, Weibo is the Twitter (NYSE:TWTR) of China. The company operates a micro-blogging social network site that hundreds of millions of Chinese consumers use every day to communicate short messages and sentiment with the public. The Chinese consumer loves the platform. Monthly active users on Weibo have consistently grown at a double-digit pace for the past several years, and the platform now features 465 million monthly active users.That's a big number. But, the problem here is that Weibo is struggling to fully monetize those 465 million users. A year ago, Weibo's advertising business was growing at a near 80% clip. Last quarter, the ad business grew by just 13%. That's a huge slowdown, and it is largely why WB stock has fallen 70% off its all-time highs over the past several quarters. * 10 Stocks to Buy That Could Be Takeover Targets Long term, the upside potential in WB stock is compelling here. The company's market cap per user is tiny, and if it can figure out how to monetize its huge user, the stock will head tremendously higher. But, until those ad growth rates turn around, that big recovery rally will be put on hold. Sohu (SOHU)Source: Sohu.com% Off Highs: 87%YTD Return: -22%Another large Chinese advertiser that has struggled in early 2019 is Sohu (NASDAQ:SOHU).At a high level, Sohu provides online media, search and game services in China, and makes most of its money through throwing ads on those various services. At one point in time, those digital ad businesses were firing on all cylinders. A year ago, the company's revenue growth rate was 22%, led by search advertising revenue growth of 55%.That growth has since evaporated. Last quarter, revenues were down 5% year-over-year, as the search ad business decelerated to just 6% year-over-year revenue growth. As the growth rates have come down, so has SOHU stock, which now sits nearly 90% off its all time highs.The rebound thesis here is less compelling. The digital ad market in China is slowing, and when growth markets slow, the lower hanging fruit tend to be hit the hardest. Some don't make it through the slowdown. Sohu is one of those lower hanging fruits. Thus, the bull thesis here lacks conviction. Tencent (TCEHY)Source: Shutterstock % Off Highs: 33%YTD Return: 3%One of China's largest digital advertisers is Tencent (OTCMKTS:TCEHY), and while TCEHY stock has favored better than its digital ad peers lately, the stock has not been immune to the digital ad slowdown.Tencent is at the epicenter of China's digital economy, operating the company's largest social networks, streaming platforms, online gaming websites and payment apps, among other things. Through its various services, Tencent employs various business models, and generates revenue from various sources. One of those sources is digital advertising. But, the digital ad business isn't a huge component of Tencent. Last quarter, online ads accounted for less than 16% of total revenues.A year ago, that digital ad business was growing at a 55% rate. Last quarter, it grew at just a 25% rate. That's a big slowdown. But, because the digital ad business is just one piece of the pie at Tencent, the company has been able to better weather that digital ad slowdown than its peers. Further, at 25% growth, Tencent's digital ad business is still doing pretty well. * The 10 Best Stocks for 2019 -- So Far Overall, TCEHY stock looks like one of the best China ad stocks to buy on weakness. This company's ad business is still growing at an impressive 20%-plus rate, and revenue diversity limits Tencent's exposure to further weakness in the digital ad market. Bilbili (BILI)% Off Highs: 34%YTD Return: -4%A smaller yet still important Chinese advertiser that has struggled over the past few quarters is Bilibili (NASDAQ:BILI).Bilibili operates a hyper-growth video sharing platform in China that has over 100 million monthly active users, and is growing that user base at a robust 30%-plus rate. The company monetizes that platform through mobile games, live broadcasting, and advertising. All three of those businesses are growing at 25%-plus rates, and the company's total revenue growth rate last quarter was just a hair under 60%. Yet, BILI stock is down 4% year-to-date, and currently trades more than 30% off its all time highs.Why the weakness despite the big growth numbers? Those big growth numbers are less big than they used to be. Over the past four quarters, user growth has dropped from 35% to 31%, and revenue growth has dropped from 105% to 58%. Mobile game revenue growth has dropped from 97% to 27%, and advertising revenue growth has dropped from 144% to 60%.In other words, a broad growth slowdown has led to a demise in BILI stock. But, this company is still in a class of its own when it comes to growth in China's digital economy, and Bilibili is still rapidly gaining share. Thus, the rebound narrative here actually looks pretty good. So long as this company can maintain strong user and revenue growth rates, near-term weakness will pass and the stock will ultimately head higher. Alibaba (BABA)Source: Shutterstock % Off Highs: 30%YTD Return: 10%One of the biggest players in the Chinese digital ad landscape is Alibaba (NYSE:BABA).Better known for its e-commerce platform, Alibaba nonetheless operates one of the largest digital ad businesses in all of China. Those two businesses, and Alibaba's cloud business, have been holding up nicely against the backdrop of an economic slowdown in China. Alibaba's overall revenue growth rates have largely remained north of 50%.Still, BABA stock trades nearly 30% off its all-time highs because investors are concerned that, eventually, slowing economic expansion in China will catch up to Alibaba, and that the company's e-commerce, ad and cloud businesses will all slow. * 7 Dark Horse Stocks Winning the Race in 2019 This could happen. But, it's not happening yet, and it is happening almost everywhere else. Thus, Alibaba has shown impressive resilience which, if sustainable, implies that fears related to a growth slowdown here are overstated. If those fears prove to be overstated, BABA stock will bounce back in a big way from recent weakness.As of this writing, Luke Lango was long GOOG, WB, TWTR, TCEHY and BABA. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Stocks to Buy As They Hit 52-Week Lows * 4 Antitrust Tech Stocks to Keep an Eye On * 5 Gold and Silver Stocks Touching Intraday Highs Compare Brokers The post 6 Chinese Stocks to Sell That Are Suffering From a Digital Ad Slowdown appeared first on InvestorPlace.