Weibo: China's Twitter

05/03/2016 10:00 am EST

Focus: STOCKS

Paul Goodwin

Emerging Markets Specialist and Analyst, Cabot Heritage Corporation

Generally speaking, for a stock to deliver, lots of things have to go right—good management, a strong line of goods and services and a big target audience, asserts global expert Paul Goodwin, editor of Cabot Emerging Markets Investor.

Weibo (WB) has all of these. The company is the operator of a Chinese-language social media platform, which has earned it the nickname of “China’s Twitter.”

Weibo has 600 million registered users, 222 million of whom are active monthly users; 85% of Weibo’s traffic comes from mobile.

The company gets its revenue from selling ads, just like Facebook (FB). Estimates are for earnings to grow 56% in 2016 and 68% in 2017.

Weibo spun off from Chinese web portal giant Sina (SINA) in 2014. Sina still owns a majority stake, with e-commerce giant Alibaba (BABA) holding a sizable minority stake.

Running a social network is a risky business in China. But Weibo’s managers appear to be quite skilled at keeping content within limits.

And the potential growth story doesn’t get much bigger, especially if Alibaba throws its weight behind it.

Weibo recently had a monster rally on rumors that Alibaba was looking to increase its stake; the stock remains under very strong accumulation, zooming to new highs on very big volume.

The company’s potential is gigantic, especially if Alibaba throws its weight (and hundreds of millions of users) behind it. If you’re not yet in, try to buy a half position on a dip

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By Paul Goodwin, Editor of Cabot Emerging Markets Investor

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