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Weibo

Nasdaq:WB
Snowflake Description

Exceptional growth potential with flawless balance sheet.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
WB
Nasdaq
$23B
Market Cap
  1. Home
  2. US
  3. Software
2017/12/16
Company description

Weibo Corporation operates as a social media platform for people to create, distribute, and discover Chinese-language content. More info.


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3 Month History
WB
Industry
5yr Volatility vs Market

Value

 Is Weibo undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
Here we compare the current share price of Weibo to its discounted cash flow analysis.value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.

How is this discounted cash flow calculated?

  • The current share price of Weibo is above its future cash flow value.
Often investors are willing to pay a premium for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for Weibo's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are Weibo's earnings available for a low price, and how does this compare to other companies in the same industry?
  • Weibo is overvalued based on earnings compared to the US Internet industry average.
  • Weibo is overvalued based on earnings compared to the US market.
Price based on expected Growth
Does Weibo's expected growth come at a high price?
  • Weibo is poor value based on expected growth next year.
Price based on value of assets
What value do investors place on Weibo's assets?
  • Weibo is overvalued based on assets compared to the US Internet industry average.
X
Value checks
We assess Weibo's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) ( Click here or on bar chart for details of DCF calculation. )
  2. Is the PE ratio less than the market average, and/ or less than the Internet industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the Internet industry average (and greater than 0)? (1 check)
  5. Weibo has a total score of 0/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.
    Note 2: PEG ratio is based on analysts EPS growth expectations in 1 year (80.59%).

    Full details on the Value part of the Simply Wall St company analysis model.
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Discounted cash flow (2 Stage Free Cash Flow to Equity)

The calculations below outline how an intrinsic value for Weibo is arrived at by discounting future cash flows to their present value. We use analyst's estimates of cash flows going forward 5 years.

See our documentation to learn about this calculation.

5 year cash flow forecast

Present value of next 5 years cash flows:
$3,119

Terminal Value

Terminal Value = FCF2021 × (1 + g) ÷ (Discount Rate – g)

Terminal Value = $1,335 × (1 + 2.47%) ÷ (9.96% – 2.47%)

Terminal value based on the Perpetuity Method where growth (g) = 2.47%:
$18,255

Present value of terminal value:
$11,354

Equity Value

Equity Value (Total value) = Present value of next 5 years cash flows + terminal value
$14,473 = $3,119 + $11,354

Value = Total value / Shares Outstanding ($14,473 / 221)

Discount to Share Price

Value per share:
$65.42

Current discount (share price of $102.72): -57.01%



Estimate of Discount Rate

The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.

Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)

Discount rate = 9.96% = 2.47% + (0.995 * 7.53%)



Estimate of Bottom Up Beta

The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm). Note the market value of equity is used not the book value ($22,526,537,903).

Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))

0.995 = 0.995 (1 + (1- 35%) (0%))

Levered Beta used in calculation = 0.995



Assumptions
  1. The risk free rate of 2.47% is from the 10 year government bond rate in USD.
  2. The bottom-up beta is estimated by analysing other companies in the same industry.
  3. The Equity Risk Premium is calculated by subtracting the risk free rate from the market return premium (7.53%) (source: Buffet).
  4. The dividend discount model is automatically used for companies in the following industries: Banks, Insurance, Real Estate Investment Trusts (REITs), Diversified Financial Services and Capital Markets.

Future Performance

 How is Weibo expected to perform in the next 1 to 3 years based on estimates from 19 analysts?

The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
Annual Growth Rate
37.2%
Expected annual growth in earnings.
Earnings growth vs Low Risk Savings
Is Weibo expected to grow at an attractive rate?
  • Weibo's earnings growth is expected to exceed the low risk savings rate of 4.5%.
Growth vs Market Checks
  • Weibo's earnings growth is expected to exceed the US market average.
  • Weibo's revenue growth is expected to exceed the US market average.
Annual Growth Rates Comparison
Analysts growth expectations
Super high growth metrics
High Growth Checks
  • Weibo's earnings are expected to grow significantly at over 20% yearly.
  • Weibo's revenue is expected to grow significantly at over 20% yearly.
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occurred. We also show the highest and lowest estimates looking forward to see if there is a wide range.
Performance in 3 years
In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
  • Weibo is expected to perform strongly, Return on Equity (ROE) in 3 years is estimated to be above 20%.

Improvement & Relative to industry
  • Performance (ROE) is expected to be above the current US Internet industry average.
  • An improvement in Weibo's performance (ROE) is expected over the next 3 years.
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Future performance checks
We assess Weibo's future performance by looking at:
  1. Is the annual earnings growth rate expected to beat the low risk savings rate, plus a premium to keep pace with inflation?
  2. Is the annual earnings growth rate expected to beat the average growth rate in earnings of the US market? (1 check)
  3. Is the annual revenue growth rate expected to beat the average growth rate in revenue of the US market? (1 check)
  4. Is the annual earnings growth rate expected to be above 20%? (1 check)
  5. Is the annual revenue growth rate expected to be above 20%? (1 check)
  6. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
Some of the above checks will fail if the company is expected to be loss making in the relevant year.
Weibo has a total score of 6/6, see the detailed checks below.

Note 1: We use GAAP Net Income Excluding Exceptional Items for our Earnings in all our calculations.

Full details on the Future part of the Simply Wall St company analysis model.

Past Performance

  How has Weibo performed over the past 5 years?

The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
Past earnings growth
Below we compare Weibo's growth in the last year to its industry (Internet).
Past Earnings growth analysis
We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
  • Weibo's year on year earnings growth rate has been positive on average over the past 5 years.
  • Weibo's 1 year earnings growth exceeds its 5 year annual average (214.3% vs 74.6%)
  • Weibo's earnings growth has exceeded the US Internet industry average in the past year (214.3% vs 7.4%).
Earnings and Revenue History
Weibo's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
Performance last year
We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
  • Strong return on shareholders funds (ROE > 20%) last year.
  • Weibo performed above the US Internet industry average based on Return on Assets (ROA) last year.
  • Performance based on Return on Capital Employed (ROCE) has been diminishing over 3 years.
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Past performance checks
We assess Weibo's performance over the past 5 years by checking for:
  1. Has earnings increased in past 5 years? (1 check)
  2. Has the earnings growth in the last year exceeded that of the Internet industry? (1 check)
  3. Is the recent earnings growth over the last year higher than the average annual growth over the past 5 years? (1 check)
  4. Is the Return on Equity (ROE) higher than 20%? (1 check)
  5. Is the Return on Assets (ROA) above industry average? (1 check)
  6. Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
Weibo has a total score of 5/6, see the detailed checks below.

Note: We use GAAP Net Income excluding extraordinary items in all our calculations.

Full details on the Past part of the Simply Wall St company analysis model.

Health

 How is Weibo's financial health and their level of debt?

A company's financial position is much like your own financial position, it includes everything you own (assets) and owe (liabilities).

The boxes below represent the relative size of what makes up Weibo's finances.

The net worth of a company is the difference between its assets and liabilities.
Net Worth
  • Weibo is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
  • Weibo's cash and other short term assets cover its long term commitments.
Balance sheet
This treemap shows a more detailed breakdown of Weibo's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
Assets
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
  • Low level of unsold assets.
  • Weibo has no debt, it does not need to be covered by total short term assets.
Historical Debt
Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
  • Weibo has no debt.
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Financial health checks
We assess Weibo's financial health by checking for:
  1. Are short term assets greater than short term liabilities? (1 check)
  2. Are short term assets greater than long term liabilities? (1 check)
  3. Has the debt to equity ratio increased in the past 5 years? (1 check)
  4. Is the debt to equity ratio over 40%? (1 check)
  5. Is the debt covered by short term assets? (1 check)
  6. Are earnings greater than 5x the interest on debt (if company pays interest at all)? (1 check)
  7. Weibo has a total score of 6/6, see the detailed checks below.


Full details on the Health part of the Simply Wall St company analysis model.

Dividends

 What is Weibo's current dividend yield, its reliability and sustainability?

Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
Annual Dividend Income
Dividend payments
0%
Current annual income from Weibo dividends.
If you bought $2,000 of Weibo shares you are expected to receive $0 in your first year as a dividend.
Dividend Amount
Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
  • Not paying a dividend.
  • Not paying a dividend.
Annualized Historical and Future Dividends
It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

We also check to see if the dividend has increased in the past 10 years.
  • Not paying a notable dividend.
  • Not paying a notable dividend.
Current Payout to shareholders
What portion of Weibo's earnings are paid to the shareholders as a dividend.
  • Not paying a notable dividend.
Future Payout to shareholders
  • Insufficient estimate data to determine if a dividend will be paid in 3 years.
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Income/ dividend checks
We assess Weibo's dividend by checking for:
  1. Firstly is the company paying a notable dividend (greater than 0.5%) - if not then the rest of the checks are ignored.
  2. Current dividend yield, is there one at all, is it higher than the low risk savings rate, and is it above the top 25% of dividend payers? (2 checks)
  3. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
  4. If they have paid a dividend for 10 years has it increased in this time? (1 check)
  5. How sustainable is the dividend, can Weibo afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
  6. Weibo has a total score of 0/6, see the detailed checks below.


Full details on the Dividends part of the Simply Wall St company analysis model.

Management

 What is the CEO of Weibo's salary, the management and board of directors tenure and is there insider trading?

Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
CEO
Gaofei Wang, image provided by Google.
Gaofei Wang
AGE 38
TENURE AS CEO 3.8 years
CEO Bio

Mr. Gaofei Wang has been the Chief Executive Officer of Weibo Corporation since February 2014. Mr. Wang served as Senior Vice President of SINA Corp since May 2013. He served as Vice President at SINA Corp and served as its General Manager of SINA Mobile from November 2006 to November 2012. He actively involved in the product and business development. He served as General Manager of Weibo since December 2012. Mr. Wang served as General Manager of Sina's Wireless Industry Department. He has been an Independent Director of Jiayuan.com International Ltd. since October 30, 2014. Mr. Wang joined SINA in August 2000 and worked in the Research and Development center until 2004 when he joined SINA Mobile. He holds a B.S. in Computer Science from Peking University and Executive M.B.A. from Guanghua School of Management of Peking University.

CEO Compensation
  • Weibo has a new CEO, we can't show their compensation history.
Management Team Tenure

Average tenure and age of the Weibo management team in years:

2.9
Average Tenure
43.3
Average Age
  • The tenure for the Weibo management team is about average.
Management Team

Gaofei Wang

TITLE
Chief Executive Officer
AGE
38
TENURE
3.8 yrs

Cao Fei

TITLE
Interim CFO & VP of Finance
TENURE
0.3 yrs

Jingdong Ge

TITLE
Vice President of Marketing
AGE
44
TENURE
3.8 yrs

Yajuan Wang

TITLE
Vice President of Sales
AGE
48
TENURE
3.8 yrs
Board of Directors Tenure

Average tenure and age of the Weibo board of directors in years:

4.3
Average Tenure
49.8
Average Age
  • The tenure for the Weibo board of directors is about average.
Board of Directors

Charles Chao

TITLE
Chairman
AGE
51
TENURE
8.3 yrs

Frank Tang

TITLE
Independent Director
AGE
49
TENURE
3.7 yrs

Pehong Chen

TITLE
Independent Director
AGE
59
TENURE
1.9 yrs

Hong Du

TITLE
Director
AGE
45
TENURE
3.9 yrs

Daniel Zhang

TITLE
Director
AGE
45
TENURE
3.6 yrs
Recent Insider Trading
  • No 3 month insider trading information.
Who owns this company?
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Management checks
We assess Weibo's management by checking for:
  1. Is the CEO's compensation unreasonable compared to market cap and profit (greater than 0.5% of the company's profit + 0.03% of market cap)? (1 check)
  2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
  3. Is the average tenure of the management team less than 2 years? (1 check)
  4. Is the average tenure of the board of directors team less than 3 years? (1 check)
  5. Weibo has a total score of 0/6, this is not included on the snowflake, see the detailed checks below.


Note: We use the top 6 management executives and board members in our calculations.

Note 2: Insider trading include any internal stakeholders and these transactions .

Full details on the Management part of the Simply Wall St company analysis model.

Company News

Company Info

Map
Description

Weibo Corporation operates as a social media platform for people to create, distribute, and discover Chinese-language content. It operates through two segments, Advertising and Marketing Services, and Other Services. The company offers self-expression products that enable its users to express themselves on its platform; social products to promote social interaction between users on its platform; discovery products to help users discover content on its platform; and notifications to notify users on Weibo account activities through SMS or push notification on their device. It also provides third-party online games, including role playing, card, strategy, and real life simulation games, as well as various services and functions to VIP members; and develops mobile apps comprising Weibo Headlines that aggregates news and information from Weibo and other online sources, as well as Weibo Weather, a weather app. In addition, the company offers advertising and marketing solutions, such as social display ads; and promoted feeds, accounts, and trends to enable its customers to promote their brands and conduct marketing activities. Further, it provides products that allow its platform partners to link their Websites and mobile apps to its platform, enabling their users to share content to Weibo; application programming interfaces, which allow third-party developers to build apps to serve individual and organization users; Weibo Credit that allows its users to purchase in-game virtual items and other fee-based services on Weibo. The company was formerly known as T.CN Corporation and changed its name to Weibo Corporation in 2012. The company was founded in 2009 and is headquartered in Beijing, China. Weibo Corporation is a subsidiary of SINA Corporation.

Details
Name: Weibo Corporation
Ticker: WB
Exchange: NasdaqGS
Founded: 2009
Market Cap: $22,526,537,903
Shares outstanding: 221,217,106
Website: http://www.weibo.com
Address: Weibo Corporation
QIHAO Plaza,
8th Floor,
Beijing,
100027,
China
Listings
Exchange Symbol Ticker Symbol Security Exchange Country Currency Listed on
NasdaqGS WB SPONSORED ADR Nasdaq Global Select US USD 17. Apr 2014
DB 2WBA SPONSORED ADR Deutsche Boerse AG DE EUR 17. Apr 2014
BMV WB N SPONSORED ADR Bolsa Mexicana de Valores MX MXN 17. Apr 2014
Number of employees
Current staff
Staff numbers
3,062
Weibo employees.
Industry
Industry: Internet Software and Services
Sector: Software