Weibo (WB) AI Stock Analysis

• Market Cap: $2.34B
• Dividend Yield: 8.59%
• Average Volume (3M): 1.09M
• Price to Earnings (P/E): 7.1
• Beta (1Y): 0.50
• Revenue Growth: 0.83%
• EPS Growth: 22.06%
• Country: US
• Employees: 4,982
• Sector: Communication Services
• Sector Strength: 84
• Industry: Internet Content & Information
• EPS (TTM): 0.45
• Shares Outstanding: 156,449,480
• 10 Day Avg. Volume: 806,944
• 30 Day Avg. Volume: 1,092,952
• PEG Ratio: -0.80
• Price to Book (P/B): 3.31
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 13.16
• Enterprise Value/Market Cap: 1.81
• Enterprise Value/Revenue: 0.60
• Enterprise Value/Gross Profit: 3.05
• Enterprise Value/Ebitda: 1.99
• 1Y Price Target: $8.50
• Price Target Upside: -10.99% Downside
• Rating Consensus: Moderate Sell
• Number of Analyst Covering: 2

• Rating: 73 Outperform
• Price Target: $10.50 ▲(9.95%Upside)

Weibo's strong technical momentum and attractive valuation are key strengths, enhancing its overall appeal. However, financial performance is hampered by cash flow issues, and the earnings call highlights flat revenue growth and challenges in key sectors. These factors contribute to a balanced overall stock score.

Positive Factors

AI Integration

Management highlighted early positive impacts from AI integration, such as improved user engagement, search usage, and ECPM, though broader adoption is still in the early stages.

Dividend Policy

Weibo announced an annual dividend policy with an annual payout of US$200mn for FY24, translating into an approximately 8% dividend yield.

Earnings

Weibo's non-GAAP net profit of USD120mn was better than consensus on lower operating expenses and higher interest income.

Negative Factors

Ad Revenue

Overall ad demand remained under pressure, with advertising and marketing revenue declining by 3% YoY to US$386mn on a constant currency basis in 4Q24.

Competitive Pressure

We expect the company to continue losing market share in the advertising space, and as a result, we maintain our Hold rating on the stock.

Market Share

Analyst views the company as an industry tracker at best and likely to continue losing share.

Weibo Business Overview & Revenue Model

Company Description

Weibo Corporation, through its subsidiaries, operates as a social media platform for people to create, distribute, and discover content in the People's Republic of China. It operates in two segments, Advertising and Marketing Services; and Value-Added Services. The company offers discovery products to help users discover content on its platform; self-expression products that enable its users to express themselves on its platform; and social products to promote social interaction between users on its platform. It also provides advertising and marketing solutions, such as social display advertisements; and promoted marketing offerings, such as Fans Headline and Weibo Express, as well as promoted trends and search products that appear alongside user's trends discovery and search behaviors. In addition, the company offers products, such as trends, search, video/live streaming, and editing tools; content customization, copyright contents pooling, and user interaction development; and search list recommendation, trends list recommendation, and Weibo app opening advertisements. Further, it provides back-end management, traffic support, and product solutions to MCNs, unions, and e-commerce partners; open application platform for other app developers that allows users to log into third-party applications with their Weibo account for sharing third-party content on its platform; and Weibo Wallet, a product that enables platform partners to conduct interest generation activities on Weibo, such as handing out red envelops and coupons. 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.

How the Company Makes Money

Weibo generates revenue primarily through advertising and marketing services. The company offers a variety of advertising solutions such as display advertisements, promoted feeds, and video ads, targeting both large enterprises and small businesses aiming to reach Weibo's extensive user base. Additionally, Weibo earns from value-added services like VIP membership subscriptions, virtual currency sales for use in games and gifting, and live streaming features. Strategic partnerships, such as collaborations with e-commerce platforms and media companies, further enhance its monetization capabilities by integrating social commerce and content-driven marketing solutions.

Weibo Financial Statement Overview

Summary

Weibo's financial performance shows strong profitability and stable balance sheet, but recent cash flow challenges are concerning. Income statement and balance sheet scores are relatively high, with effective cost management and manageable leverage. However, cash flow issues need attention, lowering the overall financial performance score.

Income Statement

Weibo's income statement reveals stable revenue with a slight decline in 2024 compared to 2023, yet gross profit margins remain strong at approximately 79%, indicating effective cost management. The net profit margin improved to 17.1% in 2024 from 19.4% in 2023, showcasing effective cost control and operational efficiency despite lower net income. The EBIT and EBITDA margins are healthy, suggesting robust operating performance.

Balance Sheet

Weibo maintains a solid balance sheet with a manageable debt-to-equity ratio of 0.53 in 2024, showing prudent financial leverage. The equity ratio is strong at 53.5%, indicating financial stability. The return on equity is at a moderate level of 8.6%, reflecting the company's ability to generate returns from its equity base.

Cash Flow

The cash flow statement for Weibo illustrates challenges, with zero reported operating and free cash flow in 2024, potentially impacting liquidity. In previous years, free cash flow was positive, indicating that recent cash flow issues might be temporary. The operating cash flow to net income ratio was favorable in prior years, reflecting efficient cash generation historically.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.75B	1.76B	1.84B	2.26B	1.69B
Gross Profit	1.39B	1.39B	1.44B	1.85B	1.39B
EBITDA	619.03M	714.45M	289.91M	668.74M	458.99M
Net Income	300.80M	342.60M	85.56M	428.32M	313.36M
Balance Sheet
Total Assets	6.50B	7.28B	7.13B	7.52B	6.34B
Cash, Cash Equivalents and Short-Term Investments	2.35B	3.23B	3.17B	3.13B	3.50B
Total Debt	1.91B	2.71B	2.42B	2.43B	2.43B
Total Liabilities	2.93B	3.76B	3.74B	3.83B	3.45B
Stockholders Equity	3.48B	3.40B	3.33B	3.59B	2.81B
Cash Flow
Free Cash Flow	578.43M	636.05M	367.40M	646.39M	706.82M
Operating Cash Flow	639.90M	672.82M	564.10M	814.02M	741.65M
Investing Cash Flow	-246.90M	-736.85M	-33.01M	-423.96M	-1.21B
Financing Cash Flow	-1.03B	21.69M	-91.14M	189.44M	741.96M

Weibo Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 9.55
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WB, the sentiment is Positive. The current price of 9.55 is below the 20-day moving average (MA) of 9.60, above the 50-day MA of 9.04, and above the 200-day MA of 8.74, indicating a neutral trend. The MACD of 0.13 indicates Positive momentum. The RSI at 54.29 is Neutral, neither overbought nor oversold. The STOCH value of 44.44 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WB.

Weibo Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PINS	80 Outperform	$24.14B	12.96	48.41%	―	17.81%	1175.52%
TME	76 Outperform	$29.34B	22.72	14.37%	0.92%	4.59%	83.27%
RDDT	75 Outperform	$28.98B	242.93	5.77%	―	64.12%	―
WB	73 Outperform	$2.34B	7.06	10.79%	8.59%	0.83%	22.06%
BIDU	71 Outperform	$30.69B	8.56	9.85%	―	-1.33%	32.92%
SNAP	63 Neutral	$15.49B	―	-23.97%	―	14.91%	59.90%
Sector *	61 Neutral	$41.24B	-0.79	-14.21%	3.80%	2.39%	-73.52%