Sina’s stock returns
Sina (SINA) shares rose over 7.0% in the last month. The stock slowly staged a comeback after a very disappointing May. The stock lost 36.0% in market value last month. The stock gained 27.0% in the first two months of 2019. Since the beginning of April, Sina shares have fallen 34.0%.
Since the beginning of 2019, Sina shares have underperformed broader indexes and its peers. The stock has fallen 18.0% since January. In the last 15 months, Sina shares have burnt significant investor wealth. During the same period, the shares have fallen 63.6%.
Sina is trading closer to its 52-week low of $38.84. The company has been pummeled due to concerns about its profitability and slowing revenue growth. Sina shares could be on the verge of a breakout.
While trade war sentiments have hit several stocks, Sina shares were impacted due to lackluster quarterly results. To learn more, read Sina Stock Has Lost over 36% This Month. In the first quarter, Sina’s revenues rose 8.0% YoY (year-over-year) to $475.0 million. The company’s adjusted earnings fell 15.0% YoY to $0.40. While Sina beat the revenue estimates of $473.18 million, it missed the earnings estimates of $0.42.
Previously, Sina expected sales growth of 18.0%–25.0% in 2019. During the first earnings call, Bonnie Zhang, Sina’s CFO, expressed concerns about missing the estimate.
Sina’s slowing revenue growth has been a concern. The company’s revenue growth fell from 58.5% in the first quarter to 8.0% in the last quarter. Sina’s sales rose ~50% YoY in the second quarter of 2018. The sales are expected to rise 6% in the second quarter.
Does the massive pullback in Sina shares mean that the stock has bottomed out? Sina stock is trading at a forward PE ratio of 13.7x. Sina’s earnings are estimated to fall 12.7% in 2019 and expand 19.7% in 2020. The company’s sales are estimated to grow 4.9% to $2.21 billion in 2019 and 13.6% to $2.51 billion in 2020.
Sina’s revenue growth will likely accelerate in 2020. The company will also be able to improve its profit margins in the next year. Sina stock could have overcorrected due to investors’ negative sentiment instead of weak fundamentals.
The 17 analysts covering Sina stock have a 12-month average target price of $60.05. The target price indicates an upside potential of 36.5% from Sina’s current price.