Why SINA Shares Surged (SINA)

Why SINA Shares Surged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Chinese Internet portal SINA (NASDAQ: SINA ) climbed 10% today on reports that China's largest e-commerce company Alibaba Group plans to buy a stake in its Twitter-like Weibo service.

So what: According to China Business News, Alibaba is considering a 15%-20% stake in SINA Weibo, valuing the microblogging service at roughly $3 billion. Although SINA's core advertising revenues continue to be weighed down by the weak economy, the reported interest from Alibaba reinforces investor optimism over Weibo's explosive growth potential.

Now what: While neither company has yet to confirm the talks, a deal seems beneficial to both sides. Specifically, Alibaba's stake in Weibo could drive significant traffic to its e-commerce sites and SINA could benefit from a much-needed increase in advertising revenue. While investors should never buy into stock based purely on buzz, SINA is certainly worth a closer look given today's news.

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