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Why Weibo Stock Jumped Today

By Chris Neiger – Sep 30, 2020 at 3:09PM

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Economic indicators show that China may be starting to bounce back.

What happened

Shares of Weibo (WB 2.03%), a China-based messaging and content app, spiked today as investors likely reacted to news about September growth in China's economy. 

Weibos' stock was up by as much as 10.4% today but had gained 9.3% as of 2:34 p.m. EDT. 

So what 

The latest manufacturing data for China was released today and showed that the country's manufacturing purchasing index rose to 51.5 in September, higher than the 51.2 forecast by economists. Any figure above 50 indicates that the sector is expanding and a growing manufacturing industry shows that China's economy may be rebounding from the economic effects of the coronavirus. 

Red and green line graphs on a black background.

Image source: Getty Images.

Weibo is a technology stock and doesn't directly benefit from the manufacturing expansion, but the bigger picture here is that China's economy could be moving in the right direction, and bringing Chinese companies along with it. Additionally, China is about to start its Golden Week, a seven-day holiday that could help improve the country's economy even more.

The combination of positive economic news and a potential boost from the upcoming holiday likely spurred investors to push Weibo's stock up.

Now what 

Weibo's stock has been extremely volatile this year. Despite today's share price jump and better-than-expected second-quarter results released earlier this week (which also caused Weibo's stock to rise) the company's share price is down 21% year to date. And while China has beaten back the coronavirus in much of the country, it's still possible that Weibo could continue to feel the negative economic effects from the virus for the next few quarters. 

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool recommends Weibo. The Motley Fool has a disclosure policy.

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