by winston » Wed Apr 04, 2018 10:46 am
not vested
Chinese Stocks to Buy: Weibo (WB)
On Jan. 26, the price of Weibo stock exceeded $136-per-share. By Feb. 8, the shares had plunged to around $112 and Weibo stock is now trading around $115.
Market weakness undoubtedly played a role in the decline, but the Chinese government’s decision to order the company to suspend several portals for a week on Jan. 27 probably contributed to the retreat as well.
Investors often get scared after such crackdowns, but they have happened before without having any major impact on Weibo and Weibo stock has still risen tremendously over the long-term despite these actions by Beijing.
Moreover, the Chinese government does not have any significant legal constraints as in America, nor does it have to worry meaningfully about popular opinion. Therefore, if China wanted to take drastic action against Weibo, it would have done so already.
I believe that Beijing takes these steps periodically simply in order to remind popular internet websites that they must prevent their users from posting content that violates Beijing’s rules too directly.
Meanwhile, Weibo’s fundamentals remain strong. The company’s fourth-quarter results beat expectations, and research firm Jefferies recently raised its price target on the shares to $160 from $150, The Fly reported.
According to Jefferies, “the combination of user growth, time spent, ad pricing improvement and diversifying video ad products gives the company the ‘right formula in further scaling up monetization efficiency'”.
Finally, as I’ve said in the past, there is a good chance that Weibo will be taken over by Alibaba.
Source: Investor Place
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