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How Do Weibo’s Valuations Look Compared to Peers?

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What factors are driving the valuations of Weibo?

Weibo (WB), considered to be the “Twitter of China,” surpassed Twitter’s user base (TWTR) in May 2017. The company’s competitors for user traffic, content, and social networking services and messenger include Tencent Holdings, Alibaba Group Holding, Baidu, NetEase, and Facebook. The S&P 500 and the tech-heavy NASDAQ ended in the red amid US-China trade war concerns on September 6. The NASDAQ Composite has gained 14.8% YTD and has a PE ratio of 25.5x. Let’s investigate the valuations of Weibo and its peers as of September 6.

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Weibo has lost 30.2% YTD (year-to-date) and last traded at a 3% premium to its 52-week low price. The company’s impressive revenue and EPS (earnings per share) have translated into optimistic revenue and EPS projections for the company. The stock has “strong buy,” “buy,” and “hold” recommendations from seven, 12, and two analysts, respectively. Weibo has a forecasted PE (price-to-earnings) multiple of 26.2x, 18.9x, and 13.9x for fiscal 2018, 2019, and 2020, respectively.

How do the valuations of peers look?

Tencent (TCEHY) last traded at a 2% premium to its 52-week low price after losing 22% in stock value YTD. The stock has a “buy” recommendation from one analyst. Tencent’s forecasted PE ratios are 35.9x, 26.2x, and 18.4x for fiscal 2018, 2019, and 2020, respectively.

Alibaba (BABA) lost 7.3% in stock value YTD. The stock last traded at a 1% premium to its 52-week low price. Alibaba has a “strong buy,” “buy,” and “hold” recommendations from 15, 26, and two analysts, respectively. The forecasted PE multiples are 28.1x, 20.8x, and 16x for the fiscal years ending March 2019, 2020, and 2021, respectively.

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Baidu (BIDU) last traded at a 4% premium to its 52-week low price. The stock has lost 8.2% YTD. Baidu has a “strong buy,” “buy,” and “hold” recommendation from eight, 14, and nine analysts, respectively. Analysts have forecasted a PE ratio of 20.9x, 18.2x, and 15x for the fiscal years ended 2018, 2019, and 2020, respectively.

NetEase (NTES) last traded at a 1% premium to its 52-week low price after losing 44.6% YTD. The stock has a “strong buy,” “buy,” and “hold” recommendation from five, 13, and 12 analysts, respectively. NetEase has a forecasted PE ratio of 23.5x, 19.1x, and 16.2x for the fiscal years ended 2018, 2019, and 2020, respectively.

Facebook (FB) lost 7.9% in its stock value YTD. The stock last traded at a 9% premium to its 52-week low price. Facebook has “strong buy,” “buy,” “hold,” “sell,” and “strong sell” recommendations from 17, 25, three, one, and one analyst(s), respectively. Analysts have forecasted a PE multiple of 22.6x, 19.5x, and 17.1x for the fiscal years ended 2018, 2019, and 2020, respectively.

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