Sina (NASDAQ:SINA) reported Q2 earnings and revenue above views. Q2 revenue increased 20.7% Y/Y to $184.4 million and was $4.4 million ahead of analyst estimates. Non-GAAP EPS was down 23% to $0.17, but the number was $0.08 ahead of consensus. Most of the growth is coming from Weibo (NASDAQ:WB). Weibo's Q2 revenue more than doubled to $77.3 million. Sina's portal advertising revenue was up 5.9% to $96.2 million. Non-advertising revenue in Q2 was $28.6 million and represents an 11% decline from Q2 2013.
Sina guided Q3 revenue between $193 million and $199 million, which is below the $199.1 million consensus (and the consensus is now down to $195.3 million as a consequence of the low guidance). Weibo is still expected to contribute the most of the growth, but Sina's overall growth rate is expected to slow down to single digits in Q3. I believe that management is conservative with Q3 guidance, and that Sina should deliver close to or above the upper range of the guidance, which translates into low-double digit revenue growth. I am basing my estimate on the fact that Sina guided Q2 revenue between $177 million and $182 million and delivered revenue $2.4 million above the high-end of the range. On the other hand, the bottom line should continue to suffer this year, as Weibo invests in product development and sales and marketing and as Sina increases its efforts in mobile and verticals for its portal business. Sina intends to achieve this through a combination of internal expansion and strategic partners or acquisitions.
Overall, it was a good quarter, although I expected more from Weibo. I am reiterating my bullish view on Sina with a $76 price target. This represents 55% upside from the current price. Weibo is a major asset for Sina and should continue to contribute heavily to Sina's potential success. A major acquisition may be a strong catalyst for Sina's share price and could boost the upside potential beyond my current expectations. As of August 13, Sina repurchased approximately 1.3 million shares for $58 million. Sina's share price has stabilized since the repurchase program was announced in April, and the repurchase program and a strong balance sheet should help protect the downside. I expect some short-term resistance between $50 and $53, and if the stock manages to get above the resistance, it could start to rally and come closer to my price target.
Disclosure: The author has no positions in any stocks mentioned, but may initiate a long position in SINA, WB over the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article. This article reflects the author's personal opinion and should not be regarded as a buy or sell recommendation or investment advice in any way.