Weekly Chinese Internet Notes: A Week Of Mixed Results For Sina
This past week, Sina’s Weibo won a major victory in the micro-blogging space with Netease shutting down its micro-blogging site, Netease Weibo. [1] Nonetheless, in recent weeks the Chinese Government however has given Sina a cause for concern by announcing its intent to crackdown on content it deems inappropriate. [2] We evaluate these events in detail and analyze how it affects Sina Corp.
Check out our complete analysis of Sina
Sina’s Victory In Micro-Blogging
- Why Sina’s Revenues Will Likely See Only A Marginal Growth in 2020
- Decline In Sina’s Q3 Advertising Revenue Isn’t A Cause For Concern Yet
- Can Sina’s Revenue Growth Numbers Recover This Year?
- Sina’s Strength In Fintech Should Make Up For Weakness In Weibo Going Forward
- Sina Likely To Report Forgettable Q1 Results, But Revenues Should Recover Sharply In The Near Future
- How Much Can Chinese Stimulus Impact Sina’s Valuation?
There are multiple micro-blogging sites in China that go by the name Weibo. To avoid confusion we reserve the term Weibo for Sina’s micro-blogging service. Netease’s competency has historically been in the email services space. It used its large email user base to try and promote its micro-blogging site. In May 2012 it claimed that it had 120 million subscribers. Currently, however, only public accounts remain active. Private users have been asked to move to another one of Netease’s websites called Lofter, which is similar to Yahoo’s Tumblr. [1]
This positive news seems to be having some delayed benefit to Sina, as its price rose by about a dollar to reach ~$41 on Friday. Yet, the micro-blogging business will be anything but smooth sailing for Sina going ahead. This is because Chinese Internet Giant Tencent poses a threat to Weibo through its instant messenger(IM) services. For the mobile platform, Tencent’s IM app is WeChat whereas for the desktop environment, they have a software called QQ. In August 2014, Sina Weibo had 156 million monthly active users (MAU) versus the 438 million MAU of WeChat. [3] Tencent itself had a micro-blogging site called Tencent Weibo, whose developement they have stopped investing in. That was one of the earliest victories for Sina in micro-blogging, but has since become a threat as it evolved into QQ and WeChat. [1]
We have projected revenues of $719 million for Sina in 2014, as opposed to Bloomberg Businessweek analysts consensus of $771 million. [4] If it can overcome the challenge of Tencent in the micro-blogging space, Sina could have a decent upside to its revenue from Weibo’s ad revenues. We have written on this earlier (See Weibo Monetization Bodes Well For Sina).
Chinese Government Policy Casts Uncertainty Over Sina’s Businesses
We had written earlier on how Sina was fined for hosting content considered inappropriate by the Chinese government (See Our Earlier Weekly Chinese Internet Note). The government has renewed its vows of keeping this campaign alive. It has identified five areas to be monitored rigorously. One of these is the micro-blogging websites, such as Sina’s Weibo. The other four are online storage, video streaming, smart TVs and video terminals. Sina, along with a few large Internet companies, has expressed its support of the government’s move and has requested users to abide by all such guidelines. In January 2014, Sina lost 28 million users to censorship. [5] While the future impact of such censorship on the popularity of these websites is a concern, the fines associated with the breach of regulations does not bode well for anyone either. [6]
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