Sina Update: Weibo User Numbers Could Suffer Near Term as Gov’t Tightens ID Requirements
Sina (NASDAQ:SINA) is an online media company in China, which makes money primarily from display advertising and mobile value added services. It runs Weibo.com, a micro-blogging service like Twitter which competes with similar offerings by other Chinese internet giants like Tencent, Sohu (NASDAQ:SOHU), Baidu (NYSE:BIDU) and NetEase. Sina is currently the market leader in China when it comes to micro-blogging. In the last two weeks, there have been some significant developments related to Sina Weibo, which could have a negative impact on its user and revenue growth going forward.
Check out our complete analysis of Sina
Display Advertising revenue from Weibo could take a hit
- Why Sina’s Revenues Will Likely See Only A Marginal Growth in 2020
- Decline In Sina’s Q3 Advertising Revenue Isn’t A Cause For Concern Yet
- Can Sina’s Revenue Growth Numbers Recover This Year?
- Sina’s Strength In Fintech Should Make Up For Weakness In Weibo Going Forward
- Sina Likely To Report Forgettable Q1 Results, But Revenues Should Recover Sharply In The Near Future
- How Much Can Chinese Stimulus Impact Sina’s Valuation?
The Chinese government announced new rules last week that will force microblog users in the Chinese mainland to verify their real identities to continue using microblog services. This move could lead to a significant decline in Sina Weibo’s user base, as users who don’t want to reveal their real identities quit the service. Verifying the identities of each user could also drag down Sina Weibo’s profits. An online check of a user identity will cost Sina around 2 RMB per user. Verifying the identities of its 300 million user base could mean a total bill of more than 600 million RMB, or around $100 million. [1]
On the plus side, Sina is trying to monetize Weibo via means other than just advertising. It recently introduced a new virtual currency called “weibi”, which users can use to buy items on Weibo. It is also launching new games on Weibo to increase virtual spending and drive user engagement. We expect its revenue from paid services like games to increase throughout the forecast period.
We have a $50 Trefis price estimate for Sina, which stands nearly 10% below the current market price. Display Advertising on its online properties like Sina.com and Weibo.com accounts for nearly 58% of its Trefis price estimate.
Understand How a Company’s Products Impact its Stock Price at Trefis
Notes: