Sina (SINA, Financial) recently released its results that were strong. The company reported 43% growth in revenue to $197 million. Also, the company posted non-GAAP net income of $192.3 million. The company saw good business through its online advertising and Weibo advertising services, which contributed revenue of $160 million and $56 million, respectively.
Sina saw good sales, resulting in strong growth in revenue and exceeded estimates. The company saw non-GAAP operating profit growth of 344% as a result of strong momentum for Weibo monetization. Sina is growing as the company is seeing growth in revenue and operating profit despite challenging markets and stiff competition from peers. The company continues to see growth in total revenue and advertising revenue as a result of strong momentum for Weibo monetization. With growing revenues, the company is seeing expansion in the profit margins going forward.
Better times in the future
Moving on to company’s Weibo business, the company has great expectations with it to excel and outperform in the future as it is seeing growth in daily active users of Weibo. With an increase in the active users from 58.9 million to 61.4 million between September-December, the company is expecting more users to join in the future, giving better growth opportunities to the company. With the growing popularity of Weibo, the company is planning to expand in the U.S.
The company is facing challenges with the continued migration of users from PCs to mobile device. The company is noticing increase in the average time spent on mobile than in pc and expecting this trend to continue. With this the company is bringing in more strategy to cope up with changing scenario.
Moving on to company’s advertising, the company saw handsome revenue growth in the major sectors such as FMCG, e-commerce and the financial services contributing to the advertising revenues growth in the fourth quarter. Further, the company’s partnership with Alibaba also proved good for the company as a result more and more online merchants spend in the company through Alibaba. Also the the advertising campaign for events such as Taobao and TMall also contributed to the revenue growth for Alibaba. Also, the company is seeing future revenue growth opportunities from SME using promoted advertising feed on Weibo which tapped markets for the company in the fourth quarter as well.
What is in store for the future?
The company is looking forward to 2014 on the front foot. With Weibo being its key point for success the company is focusing on accelerating user base and user activity on Weibo. With this improvement the company is expecting better performance in future. Further, the company is focusing on product innovation for better results. It is finding out ways to make Weibo mobile application more frequently used by user base. Also, the company is planning to work with TV programs to make Weibo an indispensable part of our user engagement for TV programs.
Moving on, the company’s partnership with Alipay, to create more efficient mobile payment solution for Weibo is expected to drive more revenue for the company in 2014. As, mobile payment is essential for online and offline marketing activities, the association of Weibo with Alipay is expected to expand the user base, increasing Weibo usage.
Further in 2014 the company is renovating its portal business, also the investment strategy in areas such as mobile and video is expected to outperform. Finally, in 2014 the company is investing heavily to expand and gain market share for existing business, exploring new business opportunities.
Valuation
Sina is looking like a profitable investment venture for now. But, looking at its trailing P/E, the company is very overvalued at a ratio of 102.02 as other competitors are cheap. But in the long run, Sina indicates good growth rate in the next five years of 26.15%, which is fairly good. Thus, investors should consider this stock for their portfolio.
