Thesis & Catalyst For Sina Corporation (NASDAQ:SINA)
Goldpebble Research Pte. Ltd. ("Goldpebble"), an independent research company focusing on processing public information by using its proprietary algorithm, today released a research summary on SINA Corporation ("Sina", NASDAQ: SINA) (Report link: www.goldpebble.com/research). The summary shared the recent contrarian view on Sina Weibo based on the data processed with Goldpebble Weibo Activity Monitoring Ssytem (GPWAMS).
With GPWAMS, Goldpebble see Weibo user activities have been growing over the past months. Weibo paying user/enterprise users has surged while daily/monthly blogging users growth has decelerated. Total Weibo users, daily blogging users and monthly blogging users reached new high to 363mn*, 14.7mn* and 50.9mn* respectively in December 2012. Number of enterprise user accelerated to 354k*. Number of paying user more than doubled from 308k* to 691k* in December from November.
The bear view is that fast growing Tencent (0700.HK) Wechat has taken majority user share from Weibo. Goldpebble disagree after looking into the reasons behind the recent paying user surge.
Goldpebble also believe with the CEO in charge of Weibo business and the whole company focusing on mobile, 2013 will be the start of the platform's monetization and estimates the revenue from Weibo's banner ads for branding clients will be limited by display space and capped at $371mn* per year.
Goldpebble think Sina needs to develop social based advertising system to increase the revenue from SMEs without compromising user experience. Goldpebble see Sina is ready to release priority display on follower's page and is testing suggested post, location, and search result recommendation. These features are based on very similar technology framework that Facebook (NASDAQ: FB) implemented.
Goldpebble have been counting Weibo's advertising banners on PC, Android phone and Iphone for past weeks. We found Weibo already penetrated 60+ of top global brands as well as top local brands. We further did a screen of top global 500 brands to 211* got Weibo enterprise accounts with average 218k* fans/followers.
Goldpebble think China has its unique culture, internet development, consumption pattern, online spending behavior. The monetization path Sina is following is unprecedented in China. Weibo is doing more than advertising. Goldpebble looked into its monetization of its 229* web games, 15,697* Weibo apps and Android app store inside Weibo app, fulfilled sales transaction.
Goldpebble believe a strategic partnership with current P4P search providers like Baidu (search links) or Alibaba (Taobao through train) may bring mutual benefit to both parties. Sina may instantly monetize its traffic while Baidu and/or Alibaba can get not only revenue but one of the best mobile app users in China. Alibaba's Taobao and Sina's Weibo already referring two way traffic leads from one to the other may bring up more synergy on utilizing the traffic. It has been confirmed by several media reports that Alibaba and Baidu are both in talk with Sina about buying a part of Weibo.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.