Sina‘s (NASDAQ:SINA) stock saw its price drop by more than 10% following a ban on the commenting feature on Sina Weibo, its microblogging service.  The Chinese government had forced Sina and Tencent, the operators of the two largest microblogging services in China, and some others to disable comments on their websites, for allegedly spreading rumors of a coup in China. Discussion threads and comments on tweets, which are the most popular features on Sina and Tencent’s Weibo were disabled for 72 hours while all coup-related tweets and comments were deleted.
While both Sina and Tencent may face some small fines in the coming days over the incident, what’s more worrying is how censorship in China can crush the rapid growth of Chinese internet giants like Sina, Tencent, Baidu (NASDAQ:BIDU), NetEase, all of which have seen their stock prices rise significantly in the last couple of years, buoyed by the Chinese internet growth story.
- How Crucial Are Small & Mid-Sized Businesses For Sina’s Advertising Business?
- Sina Earnings: Advertising, Weibo Drive Q1 Results
- What Will Sina’s Revenue And EBITDA Look Like In 5 Years?
- What’s Sina’s Fundamental Value Based On Expected 2016 Results?
- How Has Sina’s Revenue & EBITDA Composition Changed In The Last Five Years?
- Online Advertising, Mobile Services: What’s Sina’s Revenue & Earnings Breakdown?
Both Sina and Tencent were recently forced to demand real identity information from their users to continue using microblogging services in China, as part of the administration’s bid to control and censor the discussions on their popular microblogging services.
Weibo is currently one of Sina’s largest online propertlies. Sina plans to focus on increasing advertising revenue through Weibo in the coming years. Any censorship attempt leads to a decline in page views and user engagement on the service, directly impacting its display ad business, which is the most significant driver for Sina’s stock, accounting for around 65% of its total value.
We currently have a $65 Trefis price estimate for Sina, which stands nearly 2% above its market price.Notes: