Weibo: Olympic Sprint Amid A Marathon Of Macro Woes

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Weibo: Olympic Sprint Amid A Marathon Of Macro Woes

seekingalpha11-21 06:45

Weibo's Q3 ad revenue benefited from the Olympics, but macro challenges and stagnant user engagement limit growth potential.Despite a low valuation, Weibo's relevance in digital ads is questionable ...

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·11-21 09:42
@seeking alpha - I disagree with your recommendation to avoid Weibo $WB 🇨🇳 in the near future. Pattern analysis speaks volumes & WB will break out as a January effect stock. 🇨🇳 $WB 🔺🅱️🆄🅻🅻🅸🆂🅷🔺📈 @Tiger_comments @TigerStars @Daily_Discussion @TigerPicks @TigerObserver @TigerPM @TigerGPT
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- TigerGPT:
  Based on the information available, here is a summary of Weibo (WB)'s recent movement:
  Weibo's revenue in the third quarter increased by 5% year-on-year to around 3.3 billion yuan, with 587 million monthly active users. This growth is partially attributed to the impact of the Summer Olympics on advertising revenue.
  Goldman Sachs maintains a "neutral" rating on Weibo with a raised target price of HK $75.
  In terms of capital flow, there has been a small inflow of 187.23K and a small outflow of 94.74K in the stock.
  However, it's essential to note that stock movements can be influenced by various factors and are subject to market volatility. As an AI financial analyst, I can provide information and analysis, but it's important to conduct your own research and consider your investment objectives and risk tolerance before making any investment decisions.
  Risk disclaimer: The information provided here is for reference purposes only and does not constitute investment advice. Please perform your own research and consult with a qualified financial advisor before making any investment decisions.
  11-21 09:42
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Robert Daly/OJO Images via Getty Images  Weibo (NASDAQ:WB) benefited from the Q3 Olympic boost that drove much of its advertising revenue beat for the quarter, but this seasonal boost does not change the challenging macro environment that the company is facing. The stock finished the day up +6.35%, but we remain on the sidelines, given management’s cautious view on the pace of the potential recovery. At a high level, we are cautious about the relevance of WB in the digital ad space going forward, given the shift in user engagement and ad dollars to more engaging verticals such as e-commerce and short-form video. With stagnating engagement metrics and limited growth visibility on active users, we feel the monetization rate could be further pressured. At less than 5x 2025E consensus P/E, the stock is cheap, relative to the other Chinese advertising peers, but we feel this valuation is justified, given the macro-overhang. Our DCF analysis values WB at $8/share, or 13% downside from the current level. Without a material recovery in China’s macro backdrop and consumer sentiment, our expectation is low on the stock and believe it could continue to trade sideways, despite the low valuation. Capital IQ, Astrada Advisors One Time Boost Does Not Change The Narrative Advertising-related revenue was up 2% y/y and ad revenue, excluding Alibaba, was up 3%, thanks to the impact of the Olympics. In terms of sector, automotive and apparel were driven by targeted new product launches, while FMCG also showed strong momentum. Management guided positive growth for both automotive and FMCG, driven by targeted ads, along with incremental contributions from the Singles' Day shopping festival. However, the one-time Olympic boost does not change the ongoing narrative that WB is facing, namely a challenging macro backdrop in which consumption remains sluggish, thereby negatively impacting demand in key sectors such as cosmetics and personal care. Advertising demand from luxury products and property-related verticals also saw a visible pullback. More importantly, we question WB’s relevance to advertisers given the stagnating user growth and engagement metrics. We note that WB’s DAU and MAU metrics have been largely stagnant since the beginning of the last year, with y/y growth at low single digit.   Company Report, Astrada Advisors  Company Report, Astrada Advisors Engagement metric, as measured by DAU/MAU has also been stagnant over the same period, but if we were to look back in history, WB’s engagement metric has declined compared to ten years ago, as engagement shifted from microblogs to alternative channels such as short-form videos.   Company Report, Astrada Advisors A stagnating user base and engagement level is causing monetization challenges for WB, as revenue per active users have largely been flat over the past two years.   Company Report, Astrada Advisors We do not expect a near-term reacceleration in WB’s operating and financial metrics given the uncertainties surrounding China’s macro. The recent RMB 10 trillion stimulus has yet targeted consumption and property-related challenges; hence, brands are likely to hold back their advertising budget until there are visible signs of improvement in consumer confidence and spending. As such, we conservatively modeled no user growth in the next three years along with a flat monetization rate under our base-case scenario. However, we caution that there could be downside risk to our monetization and user assumptions, given the past trajectory has largely pointed to the negative. Valuation appears to be full under a conservative scenario Our DCF analysis assumes a -1% decline in advertising revenue for the next four years as we expect the Chinese policymakers to gradually unwind the local debt and property challenges rather than focus on improving consumer sentiment. This implies a prolonged weakness in the broader advertising sector, with limited growth visibility. Company Report, Astrada Advisors Our WACC of 13% assumes a 15% cost of equity and a 4.8% after-tax cost of debt. Our terminal growth rate of 1% is consistent with the current FCF growth WB has been generating. We applied a generous 5x exit multiple, in line with peer Baidu (BIDU) since both companies are heavily leveraged on China’s broad ad environment. Company Report, Astrada Advisors  Our DCF-derived target of $8/share implies 4.8x our 2025E P/E, which, we believe, is fair given the uncertain ad outlook. Although we applaud management’s effort to maintain WB’s strength in trending topics and launch events, the weak macro factor is likely to weigh on any micro improvements WB is executing; hence we would avoid this stock until there are signs of macro recovery. Until then, our preference within China’s internet space remains ex-China plays in PDD (PDD) (See: PDD Holdings: Brand Migration Driving Long-Term GMV Growth) and Meituan (OTCPK:MPNGF) (see: Meituan: Riding On Keeta To Drive Overseas Growth).","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[{"id":373243440894112,"gmtCreate":1732153358338,"gmtModify":1732156221621,"author":{"id":"4171900329979952","authorId":"4171900329979952","name":"Barcode","avatar":"https://community-static.tradeup.com/news/6688d8fb4c2a255e3b901e79755e56df","vip":1,"crmLevel":1,"crmLevelSwitch":0,"idStr":"4171900329979952","authorIdStr":"4171900329979952"},"htmlText":"@seeking alpha - I disagree with your recommendation to avoid Weibo $WB 🇨🇳 in the near future.&nbsp; Pattern analysis speaks volumes &amp; WB will break out as a January effect stock.&nbsp; 🇨🇳 $WB 🔺🅱️🆄🅻🅻🅸🆂🅷🔺📈 <a href=\"https://ttm.financial/U/3501196737273098\">@Tiger_comments</a> <a href=\"https://ttm.financial/U/9000000000000149\">@TigerStars</a> <a href=\"https://ttm.financial/U/3527667621665671\">@Daily_Discussion</a> <a href=\"https://ttm.financial/U/9000000000000572\">@TigerPicks</a> <a href=\"https://ttm.financial/U/9000000000000439\">@TigerObserver</a> <a href=\"https://ttm.financial/U/3527667588142897\">@TigerPM</a> <a href=\"https://ttm.financial/U/4141429963588842\">@TigerGPT</a>&nbsp;","listText":"@seeking alpha - I disagree with your recommendation to avoid Weibo $WB 🇨🇳 in the near future.&nbsp; Pattern analysis speaks volumes &amp; WB will break out as a January effect stock.&nbsp; 🇨🇳 $WB 🔺🅱️🆄🅻🅻🅸🆂🅷🔺📈 <a href=\"https://ttm.financial/U/3501196737273098\">@Tiger_comments</a> <a href=\"https://ttm.financial/U/9000000000000149\">@TigerStars</a> <a href=\"https://ttm.financial/U/3527667621665671\">@Daily_Discussion</a> <a href=\"https://ttm.financial/U/9000000000000572\">@TigerPicks</a> <a href=\"https://ttm.financial/U/9000000000000439\">@TigerObserver</a> <a href=\"https://ttm.financial/U/3527667588142897\">@TigerPM</a> <a href=\"https://ttm.financial/U/4141429963588842\">@TigerGPT</a>&nbsp;","text":"@seeking alpha - I disagree with your recommendation to avoid Weibo $WB 🇨🇳 in the near future. Pattern analysis speaks volumes & WB will break out as a January effect stock. 🇨🇳 $WB 🔺🅱️🆄🅻🅻🅸🆂🅷🔺📈 @Tiger_comments @TigerStars @Daily_Discussion @TigerPicks @TigerObserver @TigerPM @TigerGPT","images":[{"img":"https://community-static.tradeup.com/news/ecef1c78f0782d67990c0f4415f00105"}],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":9,"commentSize":1,"repostSize":2,"link":"https://ttm.financial/post/373243440894112","repostId":2485177314,"repostType":2,"repost":{"id":"2485177314","pubTimestamp":1732142718,"share":"https://ttm.financial/m/news/2485177314?lang=&edition=fundamental","pubTime":"2024-11-21 06:45","market":"sg","language":"en","title":"Weibo: Olympic Sprint Amid A Marathon Of Macro Woes","url":"https://stock-news.laohu8.com/highlight/detail?id=2485177314","media":"seekingalpha","summary":"Weibo's Q3 ad revenue benefited from the Olympics, but macro challenges and stagnant user engagement limit growth potential.Despite a low valuation, Weibo's relevance in digital ads is questionable du","content":"<html><body><ul><li>Weibo's Q3 ad revenue benefited from the Olympics, but macro challenges and stagnant user engagement limit growth potential.</li><li>Despite a low valuation, Weibo's relevance in digital ads is questionable due to shifting ad dollars to e-commerce and short-form videos.</li><li>Our DCF analysis values Weibo at $8/share, indicating 13% downside, with no expected near-term recovery in China's macro environment.</li><li>We recommend avoiding Weibo stock until macro recovery signs emerge, favoring ex-China plays like PDD and Meituan instead.</li></ul><p><figure><picture> <img fetchpriority=\"high\" height=\"1160px\" sizes=\"(max-width: 768px) calc(100vw - 36px), (max-width: 1024px) calc(100vw - 132px), (max-width: 1200px) calc(66.6vw - 72px), 600px\" src=\"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/77931733/image_77931733.jpg?io=getty-c-w750\" srcset=\"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/77931733/image_77931733.jpg?io=getty-c-w1536 1536w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/77931733/image_77931733.jpg?io=getty-c-w1280 1280w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/77931733/image_77931733.jpg?io=getty-c-w1080 1080w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/77931733/image_77931733.jpg?io=getty-c-w750 750w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/77931733/image_77931733.jpg?io=getty-c-w640 640w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/77931733/image_77931733.jpg?io=getty-c-w480 480w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/77931733/image_77931733.jpg?io=getty-c-w320 320w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/77931733/image_77931733.jpg?io=getty-c-w240 240w\" width=\"1536px\"/> </picture><figcaption> <p>Robert Daly/OJO Images via Getty Images</p></figcaption></figure></p> <div></div> <p>Weibo (<span>NASDAQ:WB</span>) benefited from the Q3 Olympic boost that drove much of its advertising revenue beat for the quarter, but this seasonal boost does not change the challenging macro environment that the company<span> is facing. The stock finished the day up +6.35%, but we remain on the sidelines, given management’s cautious view on the pace of the potential recovery.</span></p> <p>At a high level, we are cautious about the relevance of WB in the digital ad space going forward, given the shift in user engagement and ad dollars to more engaging verticals such as e-commerce and short-form video. With stagnating engagement metrics and limited growth visibility on active users, we feel the monetization rate could be further pressured.</p> <p>At less than 5x 2025E consensus P/E, the stock is cheap, relative to the other Chinese advertising peers, but we feel this valuation is justified, given the macro-overhang. Our DCF analysis values WB at $8/share, or 13% downside from the current level. Without a material recovery in China’s macro backdrop and consumer sentiment, our expectation is low on the stock and believe it could continue to trade sideways, despite the low valuation.</p> <p><figure contenteditable=\"false\"><span><img contenteditable=\"false\" loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2024/11/19/967275-17320642664536796.png\"/></span><figcaption><p><span>Capital IQ, Astrada Advisors</span></p></figcaption></figure></p> <h3><strong>One Time Boost Does Not Change The Narrative</strong></h3> <p>Advertising-related revenue was up 2% y/y and ad revenue, excluding Alibaba, was up 3%, thanks to the impact of the Olympics. In terms of sector, automotive and apparel were driven by targeted new product launches, while FMCG also showed strong momentum. Management guided positive growth for both automotive and FMCG, driven by targeted ads, along with incremental contributions from the Singles' Day shopping festival.</p> <p>However, the one-time Olympic boost does not change the ongoing narrative that WB is facing, namely a challenging macro backdrop in which consumption remains sluggish, thereby negatively impacting demand in key sectors such as cosmetics and personal care. Advertising demand from luxury products and property-related verticals also saw a visible pullback.</p> <p>More importantly, we question WB’s relevance to advertisers given the stagnating user growth and engagement metrics. We note that WB’s DAU and MAU metrics have been largely stagnant since the beginning of the last year, with y/y growth at low single digit.</p> <p><figure contenteditable=\"false\"><picture> <img contenteditable=\"false\" loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2024/11/19/967275-1732064266589534.png\"/> </picture><figcaption><p><span>Company Report, Astrada Advisors</span></p></figcaption></figure><figure contenteditable=\"false\"><picture> <img contenteditable=\"false\" loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2024/11/19/967275-1732064266578344.png\"/> </picture><figcaption><p><span>Company Report, Astrada Advisors</span></p></figcaption></figure></p> <p>Engagement metric, as measured by DAU/MAU has also been stagnant over the same period, but if we were to look back in history, WB’s engagement metric has declined compared to ten years ago, as engagement shifted from microblogs to alternative channels such as short-form videos.</p> <p><figure contenteditable=\"false\"><picture> <img contenteditable=\"false\" loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2024/11/19/967275-17320642665938876.png\"/> </picture><figcaption><p><span>Company Report, Astrada Advisors</span></p></figcaption></figure></p> <p>A stagnating user base and engagement level is causing monetization challenges for WB, as revenue per active users have largely been flat over the past two years.</p> <p><figure contenteditable=\"false\"><picture> <img contenteditable=\"false\" loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2024/11/19/967275-17320642665554945.png\"/> </picture><figcaption><p><span>Company Report, Astrada Advisors</span></p></figcaption></figure></p> <p>We do not expect a near-term reacceleration in WB’s operating and financial metrics given the uncertainties surrounding China’s macro. The recent RMB 10 trillion stimulus has yet targeted consumption and property-related challenges; hence, brands are likely to hold back their advertising budget until there are visible signs of improvement in consumer confidence and spending.</p> <p>As such, we conservatively modeled no user growth in the next three years along with a flat monetization rate under our base-case scenario. However, we caution that there could be downside risk to our monetization and user assumptions, given the past trajectory has largely pointed to the negative.</p> <h3>Valuation appears to be full under a conservative scenario</h3> <p>Our DCF analysis assumes a -1% decline in advertising revenue for the next four years as we expect the Chinese policymakers to gradually unwind the local debt and property challenges rather than focus on improving consumer sentiment. This implies a prolonged weakness in the broader advertising sector, with limited growth visibility.</p> <p><figure contenteditable=\"false\"><span><img contenteditable=\"false\" loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2024/11/19/967275-17320642665191207.png\"/></span><figcaption><p><span>Company Report, Astrada Advisors</span></p></figcaption></figure></p> <p>Our WACC of 13% assumes a 15% cost of equity and a 4.8% after-tax cost of debt. Our terminal growth rate of 1% is consistent with the current FCF growth WB has been generating. We applied a generous 5x exit multiple, in line with peer Baidu (BIDU) since both companies are heavily leveraged on China’s broad ad environment.</p> <p><figure contenteditable=\"false\"><span><img contenteditable=\"false\" loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2024/11/19/967275-17320642665283883.png\"/></span><figcaption><p><span>Company Report, Astrada Advisors</span></p></figcaption></figure></p> <div></div> <p>Our DCF-derived target of $8/share implies 4.8x our 2025E P/E, which, we believe, is fair given the uncertain ad outlook. Although we applaud management’s effort to maintain WB’s strength in trending topics and launch events, the weak macro factor is likely to weigh on any micro improvements WB is executing; hence we would avoid this stock until there are signs of macro recovery. Until then, our preference within China’s internet space remains ex-China plays in PDD (PDD) (See: PDD Holdings: Brand Migration Driving Long-Term GMV Growth) and Meituan (OTCPK:MPNGF) (see: Meituan: Riding On Keeta To Drive Overseas Growth).</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Weibo: Olympic Sprint Amid A Marathon Of Macro Woes</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nWeibo: Olympic Sprint Amid A Marathon Of Macro Woes\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-21 06:45 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4739148-weibo-olympic-sprint-amid-marathon-of-macro-woes><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Weibo's Q3 ad revenue benefited from the Olympics, but macro challenges and stagnant user engagement limit growth potential.Despite a low valuation, Weibo's relevance in digital ads is questionable ...</p>\n\n<a href=\"https://seekingalpha.com/article/4739148-weibo-olympic-sprint-amid-marathon-of-macro-woes\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/77931733/image_77931733.jpg","relate_stocks":{"BK4585":"ETF&股票定投概念","BK4513":"直播概念","BK4077":"互动媒体与服务","BK4588":"碎股","WB":"微博","BK4526":"热门中概股","BK4531":"中概回港概念","BK4508":"社交媒体","BK4502":"阿里概念"},"source_url":"https://seekingalpha.com/article/4739148-weibo-olympic-sprint-amid-marathon-of-macro-woes","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2485177314","content_text":"Weibo's Q3 ad revenue benefited from the Olympics, but macro challenges and stagnant user engagement limit growth potential.Despite a low valuation, Weibo's relevance in digital ads is questionable due to shifting ad dollars to e-commerce and short-form videos.Our DCF analysis values Weibo at $8/share, indicating 13% downside, with no expected near-term recovery in China's macro environment.We recommend avoiding Weibo stock until macro recovery signs emerge, favoring ex-China plays like PDD and Meituan instead.   Robert Daly/OJO Images via Getty Images  Weibo (NASDAQ:WB) benefited from the Q3 Olympic boost that drove much of its advertising revenue beat for the quarter, but this seasonal boost does not change the challenging macro environment that the company is facing. The stock finished the day up +6.35%, but we remain on the sidelines, given management’s cautious view on the pace of the potential recovery. At a high level, we are cautious about the relevance of WB in the digital ad space going forward, given the shift in user engagement and ad dollars to more engaging verticals such as e-commerce and short-form video. With stagnating engagement metrics and limited growth visibility on active users, we feel the monetization rate could be further pressured. At less than 5x 2025E consensus P/E, the stock is cheap, relative to the other Chinese advertising peers, but we feel this valuation is justified, given the macro-overhang. Our DCF analysis values WB at $8/share, or 13% downside from the current level. Without a material recovery in China’s macro backdrop and consumer sentiment, our expectation is low on the stock and believe it could continue to trade sideways, despite the low valuation. Capital IQ, Astrada Advisors One Time Boost Does Not Change The Narrative Advertising-related revenue was up 2% y/y and ad revenue, excluding Alibaba, was up 3%, thanks to the impact of the Olympics. In terms of sector, automotive and apparel were driven by targeted new product launches, while FMCG also showed strong momentum. Management guided positive growth for both automotive and FMCG, driven by targeted ads, along with incremental contributions from the Singles' Day shopping festival. However, the one-time Olympic boost does not change the ongoing narrative that WB is facing, namely a challenging macro backdrop in which consumption remains sluggish, thereby negatively impacting demand in key sectors such as cosmetics and personal care. Advertising demand from luxury products and property-related verticals also saw a visible pullback. More importantly, we question WB’s relevance to advertisers given the stagnating user growth and engagement metrics. We note that WB’s DAU and MAU metrics have been largely stagnant since the beginning of the last year, with y/y growth at low single digit.   Company Report, Astrada Advisors  Company Report, Astrada Advisors Engagement metric, as measured by DAU/MAU has also been stagnant over the same period, but if we were to look back in history, WB’s engagement metric has declined compared to ten years ago, as engagement shifted from microblogs to alternative channels such as short-form videos.   Company Report, Astrada Advisors A stagnating user base and engagement level is causing monetization challenges for WB, as revenue per active users have largely been flat over the past two years.   Company Report, Astrada Advisors We do not expect a near-term reacceleration in WB’s operating and financial metrics given the uncertainties surrounding China’s macro. The recent RMB 10 trillion stimulus has yet targeted consumption and property-related challenges; hence, brands are likely to hold back their advertising budget until there are visible signs of improvement in consumer confidence and spending. As such, we conservatively modeled no user growth in the next three years along with a flat monetization rate under our base-case scenario. However, we caution that there could be downside risk to our monetization and user assumptions, given the past trajectory has largely pointed to the negative. Valuation appears to be full under a conservative scenario Our DCF analysis assumes a -1% decline in advertising revenue for the next four years as we expect the Chinese policymakers to gradually unwind the local debt and property challenges rather than focus on improving consumer sentiment. This implies a prolonged weakness in the broader advertising sector, with limited growth visibility. Company Report, Astrada Advisors Our WACC of 13% assumes a 15% cost of equity and a 4.8% after-tax cost of debt. Our terminal growth rate of 1% is consistent with the current FCF growth WB has been generating. We applied a generous 5x exit multiple, in line with peer Baidu (BIDU) since both companies are heavily leveraged on China’s broad ad environment. Company Report, Astrada Advisors  Our DCF-derived target of $8/share implies 4.8x our 2025E P/E, which, we believe, is fair given the uncertain ad outlook. Although we applaud management’s effort to maintain WB’s strength in trending topics and launch events, the weak macro factor is likely to weigh on any micro improvements WB is executing; hence we would avoid this stock until there are signs of macro recovery. Until then, our preference within China’s internet space remains ex-China plays in PDD (PDD) (See: PDD Holdings: Brand Migration Driving Long-Term GMV Growth) and Meituan (OTCPK:MPNGF) (see: Meituan: Riding On Keeta To Drive Overseas Growth).","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":373243546300640,"gmtCreate":1732153377118,"gmtModify":1732153381960,"authorId":4141429963588842,"author":{"id":4141429963588842,"idStr":"4141429963588842","authorId":4141429963588842,"name":"TigerGPT","avatar":"https://community-static.tradeup.com/news/5b82af1deb17dfa8f94b4741b9ea2738","vip":8,"crmLevel":1,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":373243440894112,"type":1,"supId":0,"prevId":0,"content":"<p>Based on the information available, here is a summary of Weibo (WB)'s recent movement:</p><p>Weibo's revenue in the third quarter increased by 5% year-on-year to around 3.3 billion yuan, with 587 million monthly active users. This growth is partially attributed to the impact of the Summer Olympics on advertising revenue.&nbsp;&nbsp;</p><p>Goldman Sachs maintains a \"neutral\" rating on Weibo with a raised target price of HK $75.&nbsp;&nbsp;</p><p>In terms of capital flow, there has been a small inflow of 187.23K and a small outflow of 94.74K in the stock.&nbsp;&nbsp;</p><p>However, it's essential to note that stock movements can be influenced by various factors and are subject to market volatility. As an AI financial analyst, I can provide information and analysis, but it's important to conduct your own research and consider your investment objectives and risk tolerance before making any investment decisions.</p><p><em>Risk disclaimer: The information provided here is for reference purposes only and does not constitute investment advice. Please perform your own research and consult with a qualified financial advisor before making any investment decisions.</em></p>","text":"<p>Based on the information available, here is a summary of Weibo (WB)'s recent movement:</p><p>Weibo's revenue in the third quarter increased by 5% year-on-year to around 3.3 billion yuan, with 587 million monthly active users. This growth is partially attributed to the impact of the Summer Olympics on advertising revenue.&nbsp;&nbsp;</p><p>Goldman Sachs maintains a \"neutral\" rating on Weibo with a raised target price of HK $75.&nbsp;&nbsp;</p><p>In terms of capital flow, there has been a small inflow of 187.23K and a small outflow of 94.74K in the stock.&nbsp;&nbsp;</p><p>However, it's essential to note that stock movements can be influenced by various factors and are subject to market volatility. As an AI financial analyst, I can provide information and analysis, but it's important to conduct your own research and consider your investment objectives and risk tolerance before making any investment decisions.</p><p><em>Risk disclaimer: The information provided here is for reference purposes only and does not constitute investment advice. Please perform your own research and consult with a qualified financial advisor before making any investment decisions.</em></p>","html":"<p>Based on the information available, here is a summary of Weibo (WB)'s recent movement:</p><p>Weibo's revenue in the third quarter increased by 5% year-on-year to around 3.3 billion yuan, with 587 million monthly active users. This growth is partially attributed to the impact of the Summer Olympics on advertising revenue.&nbsp;&nbsp;</p><p>Goldman Sachs maintains a \"neutral\" rating on Weibo with a raised target price of HK $75.&nbsp;&nbsp;</p><p>In terms of capital flow, there has been a small inflow of 187.23K and a small outflow of 94.74K in the stock.&nbsp;&nbsp;</p><p>However, it's essential to note that stock movements can be influenced by various factors and are subject to market volatility. As an AI financial analyst, I can provide information and analysis, but it's important to conduct your own research and consider your investment objectives and risk tolerance before making any investment decisions.</p><p><em>Risk disclaimer: The information provided here is for reference purposes only and does not constitute investment advice. Please perform your own research and consult with a qualified financial advisor before making any investment decisions.</em></p>"}],"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":0,"commentSize":1,"repostSize":3,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}