Three Trends That Impacted Sina in 2014

-4.57%
Downside
43.26
Market
41.29
Trefis
SINA: Sina logo
SINA
Sina

Below we analyze the trends that shaped Sina‘s (NASDAQ: SINA) performance in 2014. Sina spun off its micro-blogging division, Weibo, in an IPO in April 2014. Sina remains the majority shareholder and Weibo’s results are consolidated by Sina for reporting. Weibo was and continues to be the momentum generator for Sina’s strong revenue growth. There were also efforts to develop verticals such as online lottery and web-based financial services. The Chinese Government, however, posed a challenge to Sina through its tough censorship stance.

See our complete analysis of Sina here

Weibo Remains The Growth Engine

Weibo is a micro-blogging and social networking website that enables users to follow celebrities and share user-generated content. It posted strong growth in each of the three quarters to date of 2014. Advertising revenues from Weibo increased year-on-year by 176% in Q1, 99% in Q2 and 58% in Q3 2014. This increase has been due to both the expanding user base and better monetization of the user base. This can be seen in the rate of growth of the user base, which was only 36% in Q3, much lower than the revenue growth rate.

Sina hasn’t always seen such strong performance on the user base front, with its user base declining by 9% in 2013 following the shift of micro-bloggers to the mobile platform. In 2014, Sina’s position in the micro-blogging space improved after rival Netease announced the closure of its micro-blogging website (See our Weekly Chinese Internet Notes).

Developing New Verticals

The talk of Sina entering the financial services space had been around since late 2013. In Q2 2014, it finally launched a portal called micro-fortune. During the Q3 earnings call, Sina’s management suggested that they would invest in this platform to facilitate the offering of a greater variety of wealth management products.

Relevant Articles
  1. Why Sina’s Revenues Will Likely See Only A Marginal Growth in 2020
  2. Decline In Sina’s Q3 Advertising Revenue Isn’t A Cause For Concern Yet
  3. Can Sina’s Revenue Growth Numbers Recover This Year?
  4. Sina’s Strength In Fintech Should Make Up For Weakness In Weibo Going Forward
  5. Sina Likely To Report Forgettable Q1 Results, But Revenues Should Recover Sharply In The Near Future
  6. How Much Can Chinese Stimulus Impact Sina’s Valuation?

Regulatory Issues

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, and 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 for reasons related to censorship. While the future impact of such censorship on the popularity of these websites is a concern, the fines associated with the breach of regulations may be more of an issue.

View Interactive Institutional Research (Powered by Trefis):
Global Large CapU.S. Mid & Small CapEuropean Large & Mid CapMore Trefis Research