Why Weibo Corporation (NASDAQ:WB) Could Be Worth Watching

Let's talk about the popular Weibo Corporation (NASDAQ:WB). The company's shares received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$52.95 at one point, and dropping to the lows of US$47.09. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Weibo's current trading price of US$48.13 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Weibo’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Weibo

What is Weibo worth?

According to my valuation model, the stock is currently overvalued by about 40%, trading at US$48.13 compared to my intrinsic value of $34.41. This means that the buying opportunity has probably disappeared for now. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Weibo’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Weibo?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to more than double over the next couple of years, the future seems bright for Weibo. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in WB’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe WB should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on WB for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for WB, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into Weibo, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 2 warning signs for Weibo and you'll want to know about them.

If you are no longer interested in Weibo, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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