Sina’s (NASDAQ:SINA) stock has fallen from over $120 in early 2018 to one-third that price now due to a combination of headwinds from the U.S.-China trade war and slowdown in core revenue growth. Trefis highlights trends in Sina’s revenues over recent years along with our forecast for 2019 and 2020 in an interactive dashboard. We believe that advertising growth on the back of Weibo and non-advertising revenue from the company’s fintech initiatives are expected to continue to pick up steam. We maintain a $77 fair value for Sina’s stock – with Weibo as the major driver for the company’s value. You can modify any of the key drivers to visualize the impact of changes on the company’s valuation. Additionally, you will find more Trefis information technology data here.
An Overview of Sina’s Business Model
What Need Does It Serve?
- Microblogging-based advertising services allow targeted advertising based on user interests and the feedback generated can also be quickly analyzed (through text analytics).
- Moreover, user engagement is better, as users are able to communicate almost in the same way people chat. The key difference is that intimate conversations are viewable publicly.
- It is a known fact that users tend to disclose a lot more to a screen.
- Microblogging services are able to tie together these psychological aspects to deliver extremely engaging content.
What Are The Alternatives?
- Weibo is also known as the Twitter of China. While there are options such as social networking and gaming, for microblogging based social advertising, Weibo is China’s leading player (Twitter is not available in China).
- Other online advertising options include Baidu and Tencent.
What Are The Operating Segments?
- Display Advertising (revenue of $1.8 billion in 2018, 85% of total revenue): Segment revenue is derived from mobile and web advertising. Weibo, a microblogging site (also called the Twitter of China), has been the major contributor of the company’s growth.
- Others (revenue of $319 million in 2019, 15% of total revenue): Segment revenue is derived from online payments and loan facilitation services.
Understanding Trends In Sina’s Revenues, And Expected Trends
Sina’s revenues have more than doubled over 2016-18 to $2.1 billion and is expected to increase 20% to $2.6 billion by 2020
Display Advertising Revenue growth of about $415 million over the next two years will be be driven by Weibo, a microblogging site (also called the Twitter of China)
- Display advertising revenue increased by almost $1 billion over the last couple of years, driven by Weibo advertising and marketing revenues.
- Over the next couple of years, Weibo advertising and marketing revenues are likely to continue to help revenues grow.
Other Revenues to grow by about $74 million over the next two years due to fintech offerings, including online payments and loan facilitation services
- Over the last couple of years, the $160 million increase in Other revenue has been driven by small acquisitions and fintech services.
- Over the next couple of years, the incremental $74 million is likely to be derived from fintech offerings to Weibo and consolidation of segment asset operations.
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