Weibo boasts unprecedented user growth and better than expected results – yet investors aren’t happy
Weibo's user numbers soared last year and revenue went up, but many investors aren't getting the earnings per share they hoped for.
The figures
China's answer to Twitter had a good 2014 as far as earnings and user growth were concerned – revenue went up by 77 per cent to $334.2 (£222m), while daily active users increased by 31 per cent to 175.7m over the 12 month period.
Its fourth quarter results were also positive, with revenue rising by 47 per cent to $105.2m during the three months to 31 December. This beat the company's own guidance of a revenue between $102m and $105m.
The social media company said the strong performance was mainly down to growth in advertising.
Why it's interesting
Weibo listed on Nasdaq in April last year, and initially shares did well, rising slightly in value.
But following a peak in September, they started to steadily decline, and at the beginning of 2015 they were at half their highest 2014 value.
Since the start of 2015 they have been picking up again, and the better-than-expected financial results today might have been expected to drive up investor sentiment. But the initial reaction tells a different story – shares declined by over six per cent following the news.
This may have been because although the overall outlook was good, earnings per share did not live up to what some were hoping for – fourth-quarter net earnings amounted to $0.02 per share, compared with $0.11 per share in 2013.
Analysts who spoke to Thompson Reuters had predicted slightly higher earnings of $0.04 per share for the fourth quarter.
What Weibo said
Chief executive Gaofei Wang said the company would continue to concentrate on marketing and advertising over the coming year:
Our execution has been solid since our IPO last April. In 2014, Weibo experienced the largest user increase since our inception, as we continued to focus on building the leading social media in China for internet users to create, share and discover multi-media content.On the monetization front, mobile ad revenues now make up more than half of Weibo's total ad revenues, and we are seeing significant interest from customers to learn more about Weibo marketing. 2015 will be another high growth year for mobile and social marketing in China, and we are well positioned to take advantage of this trend.
In short
Weibo is growing and its revenues are increasing. Now it just needs to convince investors of its value in the long term.