Trade-Ideas: Weibo (WB) Is Today's

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 $24.1 million.
  • WB has traded 62,147 shares today.
  • WB is down 3.3% today.
  • WB was up 6.6% 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 627. 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 866,000 shares per day over the past 30 days. Weibo has a market cap of $3.8 billion and is part of the technology sector and internet industry. Shares are up 32.1% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Weibo as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 5.8%. Since the same quarter one year prior, revenues rose by 42.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • WB has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.45, which clearly demonstrates the ability to cover short-term cash needs.
  • After a year of stock price fluctuations, the net result is that WB's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • 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.
  • The gross profit margin for WEIBO CORP -ADR is currently very high, coming in at 75.81%. 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.

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