Please ensure Javascript is enabled for purposes of website accessibility

Why SINA Corporation Stock Plunged Today

By Steve Symington – Feb 23, 2017 at 1:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Chinese internet-media specialist dropped even after a strong quarterly report. Here's what investors need to know.

What happened

Shares of SINA Corporation (SINA) were down 12% as of 11:45 a.m. EST Thursday, despite strong fourth-quarter 2016 results from the Chinese internet-media company.

So what

Adjusted quarterly revenue rose 23% year over year, to $310.8 million, including a 20.8% increase in online advertising revenue, to $269.6 million. Within the latter figure, advertising and marketing revenue from Weibo jumped 45%, to $187.9 million, more than offsetting a 23% decline in portal ad revenue, to $31.3 million. On the bottom line, adjusted net income nearly doubled, to $48.2 million, while adjusted net income per share rose 80% year over year, to $0.63.

By comparison, analysts' consensus estimates predicted SINA would turn in lower adjusted revenue of $301.6 million, and adjusted earnings of only $0.55 per share.

SINA logo

IMAGE SOURCE: SINA Corp.

Now what

Assuming exchange rates remain steady, SINA anticipates adjusted revenue for the full year of 2017 to be between $1.30 billion and $1.44 billion, which was also significantly above the $1.27 billion investors were expecting.

So why the decline? For one, keep in mind that even after today's drop, shares of SINA are still up more than 60% over the past year. So perhaps some investors are taking profits off the table in spite of SINA's relative outperformance this quarter.

And to be fair, SINA still has work to do in continuing to better monetize the growing mobile user base of its weaker portal business. But even then, management insisted during the subsequent conference call that its portal advertising business has "very much stabilized," and should continue to improve as we get deeper into 2017.

In short, sometimes our fickle market's reaction to earnings simply doesn't line up with what's actually happening in the business. In SINA's case, I think this could ultimately prove to be a compelling opportunity for patient investors to open or add to their positions.

Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Sina. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

SINA Corporation Stock Quote
SINA Corporation
SINA

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
326%
 
S&P 500 Returns
102%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.