NEW YORK (TheStreet) -- SINA Corp (SINA) is climbing on Monday after Weibo, a company it has majority ownership of, filed a Form F-1 Registration Statement with the SEC to raise around $500 million in a U.S.-based IPO.
Shanghai-based SINA holds a majority 78% stake in micro-blogging platform Weibo, while Alibaba (which is also expected to float on U.S. markets this year) owns around 19%.
In its filing, Weibo said it will "use approximately $250 million of the net proceeds we receive from this offering to repay loans we owe to SINA, our parent company and controlling shareholder."
By market open Monday, SINA shares had added 8% to $69.77.
Weibo said the remaining capital raised will be reinvested in technology, infrastructure and product development, as well as other general corporate purposes.
In the three months to December, Weibo's ad revenue soared 163% year over year to $56 million, while gross revenues climbed 185% to $188.3 million. The company said it had 129 million users at the end of last year and that its total number of daily users grew 36% to 61.4 million.
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TheStreet Ratings team rates SINA CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate SINA CORP (SINA) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 16.4%. Since the same quarter one year prior, revenues rose by 41.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- SINA CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, SINA CORP increased its bottom line by earning $0.59 versus $0.45 in the prior year. This year, the market expects an improvement in earnings ($1.55 versus $0.59).
- Powered by its strong earnings growth of 1866.66% and other important driving factors, this stock has surged by 35.54% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- SINA's debt-to-equity ratio of 0.67 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 6.28 is very high and demonstrates very strong liquidity.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, SINA CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: SINA Ratings Report