Perilous Reversal Stock: Weibo (WB)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Weibo ( WB) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Weibo as such a stock due to the following factors:

  • WB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $19.9 million.
  • WB has traded 78,876 shares today.
  • WB is down 4.4% today.
  • WB was up 8.9% yesterday.

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More details on WB:

Weibo Corporation operates as a social media platform for people to create, distribute, and discover Chinese-language content. The company operates through two segments, Advertising and Marketing Services, and Other Services. WB has a PE ratio of 563. Currently there is 1 analyst that rates Weibo a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Weibo has been 758,000 shares per day over the past 30 days. Weibo has a market cap of $3.4 billion and is part of the technology sector and internet industry. Shares are up 23.6% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Weibo as a sell. The area that we feel has been the company's primary weakness has been its poor profit margins.

Highlights from the ratings report include:
  • The gross profit margin for WEIBO CORP -ADR is rather high; currently it is at 69.96%. Regardless of WB's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WB's net profit margin of -3.00% significantly underperformed when compared to the industry average.
  • Compared to other companies in the Internet Software & Services industry and the overall market, WEIBO CORP -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
  • WB has underperformed the S&P 500 Index, declining 12.85% from its price level of one year ago.
  • WEIBO CORP -ADR reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($0.24 versus -$0.33).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 93.9% when compared to the same quarter one year prior, rising from -$47.38 million to -$2.89 million.

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