SINA Corporation (SINA) is planning to diversify its business beyond online services to include financial services and will launch an online finance platform by the end of this year. Although SINA hasn't made it official, it has been reported that the company has obtained a payment license and is preparing for the launch. Its subsidiary Weibo will operate this platform, which will release an online wealth management platform in cooperation with mutual fund companies and insurance companies to sell financial products. Sina acquired the license for Internet payment and mobile phone payment in June this year, and it will integrate these functions into the new platform of Weibo. I believe SINA could leverage on its vast Weibo users to target customers and offer personalized financial services for them.
After Alibaba and Baidu (BIDU), SINA is the latest Chinese technology company to foray into financial services. Alibaba, Tencent, and Baidu have sought permission to build financial service platforms to offer mutual funds, loans, and other financial products to web users. In October, Baidu launched an online wealth management platform, Baifa. It was launched in collaboration with China Asset Management. The launch of this platform was quite successful, as it sold financial products worth more than $164 million and registered more than 120,000 clients in just five hours of its launch. Analysts have estimated that Baifa will attract investments of more than $16.42 million by the end of this year. Looking at such a demand, Baidu launched its second investment product, Baizhuan, three days after the launch of Baifa. Baizhuan will invest in financial instruments with stable returns, such as government bonds of one year or less than one year maturity, central bank bills, and certificates of deposit. It will offer an annual return of 5.05% in comparison to bank's deposit rates of 0.35% and Alibaba's Yu'ebao 4.75%.
Weibo expanding its presence
SINA's total advertising revenue increased 26% year over year to $151.6 million in the third quarter of 2013. The solid performance was driven by Weibo's increasing advertising sales, which climbed 125% year over year to $43.7 million. Weibo's ad revenue now represents 29% of Sina's total advertising revenue as compared to 16% in the same period last year and 25% in the last quarter.
SINA is reaping benefits from its partnership with Alibaba, as it contributed revenue of $20 million. SINA has been trying to maximize profit from Weibo and has introduced new features. On October 30, Weibo allowed brands and celebrities to offer subscriptions to their followers and Weibo takes a percentage of this subscription. This new marketing channel is called Weibo Fan Service, which will be available as a mobile app and web app. Weibo users can access brand and celebrity content such as text and voice messages. Users will receive regular updates from their favorite celebrities and organizations about latest developments, events, or happenings. Through the platform enterprises can target audiences based on the demographics such as gender, interests, etc., as it displays enterprises' advertisements to targeted customers. As of October, 60,000 brands and Weibo users have signed up for subscriptions.
In order to expand its presence and compete with its famous counterpart Twitter (TWTR), SINA entered the markets in Singapore and Indonesia as well. Twitter has more penetration in terms of its users in Southeast Asia, but it has less than 18,000 active users in China. SINA has a limited presence outside China, especially when it comes to its monetization efforts. Weibo intends to target Chinese speaking audiences in Singapore and Indonesia. Southeast Asia makes up an important part of Weibo, as it contributes 25% of the overseas market. The company has cited "favorable tax policies, solid talent pool, and government grants" as driving factors, which has made Singapore a target destination, whereas Indonesia has a large population that includes 7 million Chinese. SINA hopes to achieve 1.5 million daily active users in Singapore.
Meanwhile, Twitter has more users outside its home turf, but revenue generation is still an issue for it. Twitter generates a major part of its revenue from mobile users; more than 70% of its advertisement revenue was generated from mobile. The mobile segment has been a strength for Twitter, but its competitors are also going strong in this segment. In the third quarter, around 76% of Monthly Average Users, or MAUs, visited Twitter from a mobile device, including mobile phones and tablets. In terms of revenue, Asia Pacific is the biggest mobile ad market, with an estimated $4.8 billion of revenue in 2013. Countries in this region have an advantage for Twitter, as a large part of users access Twitter through mobile devices.
Twitter has emphasized that international expansion is a vital part for growth of its business and revenue. Twitter's international revenue was $53 million in 2012 and increased to $106.7 million for the nine months ending September 30, 2013. International revenue contribution increased to 25% of its total revenue at the end of September 2013 from 17% in 2012. I believe Twitter will put additional focus on the international market, with more campaigns and efforts to promote these markets, which can help the company achieve additional users and advertising revenue.
SINA's financial venture is a good move, considering the past success of Baidu's wealth management platform. The ad revenue for SINA witnessed record growth in this quarter, and it remains to be seen whether SINA can effectively promote its advertising services without impacting user experience in terms of matching user preferences and promotional content. Expansion outside its domestic territory and competition from Twitter, especially for mobile Internet users, is expected to remain intense in the near future. In comparison to Twitter, SINA has a diversified source of revenue and expects fourth quarter revenue to be in the range of $190 million to $194 million. I recommend SINA as a good long-term investment.