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Why SINA Stock Fell 12.1% in March

By Keith Noonan – Updated Apr 9, 2019 at 4:09PM

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Shares have lost roughly a third of their value over the last year due to weakening ad demand and slowing growth for a key subsidiary.

What happened

Shares of SINA (SINA) dipped 12.1% in March, according to data from S&P Global Market Intelligence. The Chinese tech company delivered fourth-quarter earnings results that fell short of the market's expectations and triggered a double-digit sell-off.

SINA Chart

SINA data by YCharts.

SINA published its fourth-quarter and full-year results on March 5. Revenue for the fourth quarter rose 14% to $573 million, but missed the average analyst estimate for sales of $575.3 million. Earnings per share for the period came in at $0.08, well below the average analyst estimate target for $0.17. 

A man holding a tablet displaying a magnifying-glass icon.

Image source: Getty Images.

So what

The company was also likely affected by sell-offs for its Weibo (WB -2.84%) subsidiary, which it still owns a major stake in. Weibo reported its fourth-quarter earnings on the same day as SINA, and while the social media spinoff's sales and earnings for the period topped the average analyst targets, the market appears to have been dismayed by its guidance for slowing sales growth.

SINA generates the majority of its revenue from Weibo's microblogging platform, so a slowdown for the social media business can be expected to have a significant impact on the parent company. Slowing growth for Weibo also looks more concerning in light of declines for SINA's portal advertising business, which saw revenue decline 29% year over year last quarter.

Now what

SINA's stock has bounced back some in April, trading up roughly 9% in the month so far. 

SINA Chart

SINA data by YCharts.

Weibo is still posting solid revenue and earnings growth, and it helped SINA grow its sales 33% in 2018. But declines for SINA's portal advertising business could continue to weigh on the parent company's performance.

SINA shares trade at roughly 19.5 times this year's expected earnings, while Weibo is valued at roughly 23.5 times the average analyst earnings target.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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