Sina Corporation is set to release earnings today, May 16, after the closing bell. Even if earnings are a let down many close to the company are planning to use any dip in share price as an entry point. The value added services platform recently applied to Weibo is expected to become exponentially more profitable as it penetrates the market. If the proliferation of mobile device use in China were to continue at the present rate this could be a highly profitable enterprise. The VAS addition will likely boost historically low margins, though the business is still in a transitional phase. Interestingly, a large stake of Sina WeiBo was recently purchased by Alibaba, the most well known of Chinese e-commerce services. Many investors feel that a long term relationship between the two companies could yield impressive results.
Sina Corporation is not going anywhere particularly quickly, however in the mid- to long-term it would be hard to argue against their growth and profit potential. All of their key profit-generating elements are in growth-oriented markets, namely mobile advertising and commerce. If the company can honestly report an optimistic outlook for next quarter it would seem unwise to ignore SINA’s potential for impressive growth.
bradyr@keeneonthemarket.com