Sina Enters China's E-Commerce Market With WeiboPay

| About: Sina Corporation (SINA)

Sina (NASDAQ:SINA), an online Chinese media company, recently launched an online payment service called WeiboPay, which has deepened its entry into the Chinese e-commerce market. The latest move also puts an end to rumors regarding possible partnership between Alibaba and Sina. We believe the latest move augurs well for Sina in the long run on account of the strong opportunity in the Chinese e-commerce market. With more than 500 million registered users, we think Sina can leverage its user base to tap this market potential.

Sina recently introduced its online payment service WeiboPay as it works toward improving Weibo monetization. It will allow Weibo users to buy products from the Weibo platform by partnering with companies that intend to sell their products through Weibo corporate accounts. WeiboPay is expected to compete with other similar services such as Alipay, a popular online payment tool provided by Alibaba. Users buying products from the platform will have a choice to pay through either credit card or other third-party system, such as WeiboPay or Alipay. While earlier there were talks about a possible partnership between Alibaba and Sina regarding Weibo, the recent announcements have put those rumors to rest.

Last year, Sina had partnered with Mercedez Benz and Xiaomi Corp., a Chinese smartphone company to sell their products on the Weibo platform. We expect Sina to form various partnerships of this kind in 2013. The launch of WeiboPay is encouraging, considering the size and growth of the Chinese e-commerce market. According to a report by China's E-Commerce Research Center, the volume of transactions in China's online retail market grew by 65% in 2012, to reach 1.32 trillion yuan ($210 billion). The figure is further estimated to grow by 37% in 2013, according to experts. With more than 500 million registered users on Weibo, we believe Sina can leverage its user base to tap this growing market.

There are also news reports that suggest Sina is closely testing a new product, which allows e-commerce players to connect with their followers on Weibo. We believe these efforts will positively impact Sina's advertising revenues and will contribute to the stabilization in its market share in the Chinese Internet advertising market in the long run.

Our $57 price estimate for Sina's stock, represents around 20% upside to the current market price.

Disclosure: No positions.