Please ensure Javascript is enabled for purposes of website accessibility

Why Weibo Stock Jumped 10% Today

By Anders Bylund - Mar 18, 2021 at 2:19PM

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 microblogging specialist beat Wall Street's estimates across the board in the fourth quarter of 2020.

What happened

Chinese microblogging service Weibo (WB 1.46%) reported strong fourth-quarter results early Thursday morning, driving the stock as much as 10% higher. Weibo's shares had retreated to a 7.7% gain by 2 p.m. EDT.

So what

Weibo's fourth-quarter sales rose 9.7% year over year, landing at $513 million. Adjusted earnings increased by 20% to $0.92 per diluted share. Your average analyst would have settled for earnings of roughly $0.74 per share on revenue near $499 million. Looking ahead, Weibo's management expects first-quarter sales to grow approximately 28%, which works out to $412 million. Here, the analyst consensus stopped at $399 million.

Several coloful arrows swirl upward from a smartphone screen.

Image source: Getty Images.

Now what

The company posted modest year-over-year user growth and wider profit margins. Management would have preferred the opposite situation, as Weibo's business model is tuned to maximize top-line growth and user additions at the expense of limited bottom-line profits, but exorbitant profits is one of the nicer problems a business can have.

Weibo took this opportunity to promote finance VP Fei Cao to CFO. Furthermore, Wei Wang was installed as chief operating officer, a newly created position in Weibo's management structure. Both Cao and Wang originally joined Weibo from senior leadership positions in parent company SINA. The market calmly accepted these corner-office appointments.

It's no surprise to see investors embracing Weibo's earnings beat and bullish guidance. The stock has now gained 48% in 52 weeks.

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

Weibo Corporation Stock Quote
Weibo Corporation
WB
$21.50 (1.46%) $0.31
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 service.

Stock Advisor Returns
338%
 
S&P 500 Returns
119%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/17/2022.

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.