Weibo (NASDAQ:WB) had a great run in 2017. The Chinese social media company's stock rallied 183% during the year, fueled by a streak of double-digit revenue growth and triple-digit earnings growth.

After that big rally, investors might be wondering if Weibo still has room to run. I think that Weibo is still a great long-term play on China's booming internet market, but investors shouldn't get too greedy for three simple reasons.

Weibo's mobile app.

Weibo's mobile app. Image source: Google Play.

1. Its valuation

Analysts expect Weibo's revenue and earnings to respectively rise 67% and 104% for fiscal 2017. For fiscal 2018, they anticipate 55% sales growth and 62% earnings growth.

Those estimates are impressive, but much of that growth is already priced in. Weibo currently trades at 97 times earnings, versus the industry average of 39 for internet information providers. Its forward P/E of 43 looks cheaper, but it probably won't offer much support during a market downturn.

2. Tighter censorship rules

Chinese regulators took aim at Weibo multiple times last year. Last June, they ordered Weibo and two other platform to halt certain live video and audio streams until they obtained new government-issued licenses.

In September, they fined Weibo's parent companies SINA (NASDAQ:SINA), Baidu, and Tencent (NASDAQOTH:TCEHY) over allegations of users spreading "violence and terror, false rumors, pornography, and other information that jeopardizes national security, public safety, and social order."

Weibo required all its users within China to register their real names later that month. Prior to the Communist Party's National Congress in October, Weibo and Tencent blocked their users from editing their social media profiles until November. Weibo also suspended its overseas registrations until Oct. 30.

Weibo then hired 1,000 new supervisors to block "pornographic, illegal and harmful content," and even introduced "social credit" scores that could limit their ability to use the platform. These moves might keep Weibo in the government's good graces, but also alienate its existing users and prevent new users from signing up.

3. Disruptive competition

When SINA spun off Weibo as an IPO in 2014, the microblogging site was on the ropes, battered by newer platforms like Tencent's WeChat. But Weibo subsequently rebounded by securing deals for pre-installed apps with smartphone makers, expanding into rural areas, and streamlining its network to showcase top celebrities, influencers, and brands.

Weibo is still growing at a healthy clip, with its monthly active users (MAUs) rising 27% annually to 376 million last quarter. But it now faces a new generation of disruptive threats, like live video platforms, social news aggregators, and monolithic "super apps".

Momo's mobile app.

Momo's mobile app. Image source: Google Play.

YY (NASDAQ:YY) and Momo (NASDAQ:MOMO) are both gaining ground in the niche market of live video broadcasts. YY, which has 73 million MAUs, offers live streaming broadcasts for e-learning, music, entertainment, sports, and gaming. Momo, which reaches 94 million MAUs, lets users broadcast live videos to other users.

Toutiao, a news aggregator platform that reaches 180 million MAUs, is also considered a major threat to Weibo's social network and SINA's news portals. That's why SINA and Weibo blocked their members from cross-posting content to Toutiao last year.

Lastly, there's Tencent's WeChat, which has 980 million MAUs worldwide and remains the top messaging app in China. Tencent has been expanding WeChat into an all-in-one "super app" for mobile payments, deliveries, and other services. The platform's ubiquitous nature could hurt smaller platforms like Weibo.

The bottom line

Weibo is still a solid growth stock, but investors should recognize the risks. Its high valuations flag it for a sell-off during a market downturn, tighter censorship rules could throttle its user growth, and disruptive rivals could lure away users. Therefore, investors can nibble on Weibo at these prices, but they shouldn't get greedy yet.

Leo Sun owns shares of Baidu, Sina, and Tencent Holdings. The Motley Fool owns shares of and recommends Baidu and Tencent Holdings. The Motley Fool recommends Momo, Sina, and Weibo. The Motley Fool has a disclosure policy.