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Why Sina’s Slowing Revenue Growth Is a Concern

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Revenue growth down to 8% in Q1 2019

As shown in the chart below, Sina’s (SINA) sales growth has decelerated over the last few quarters, falling YoY (year-over-year) from 58.5% in the first quarter of 2018 to just 8.0%. While companies’ sales don’t usually grow 60% annually forever, Sina’s revenue growth decline is still a concern. Sina’s sales rose ~50% YoY in the second quarter of 2018, and they’re expected to rise by just 6% in the second quarter of 2019.

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Sina depends on Weibo for revenue growth

Although Sina spun off Weibo (WB) in 2014, the former retains a majority voting stake in the latter, and Sina generates ~84% of its revenue from Weibo. Therefore, a slowdown in Weibo sales could hugely impact Sina.

Weibo’s sales growth fell YoY from 76% to just 14% in the first quarter of 2019, marking its slowest quarter in terms of revenue growth since its spin-off five years ago. Sina and Weibo depend on advertising revenue for sales, and China’s (FXI) slowing economy and currency depreciation have impacted ad spending.

Peers Tencent (TCEHY) and Baidu (BIDU) have also struggled to grow their ad revenue. While Baidu’s ad sales rose just 3% in the last quarter, Tencent’s ad sales rose 25% (down YoY from 55%). Weibo expects sales to rise 0%–2% YoY in the second quarter, meaning Sina’s sales may also rise by single digits.

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