An In-Depth Look At Our $94 Price Estimate For Sina

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

Sina (NASDAQ:SINA) had a solid 2017, with the company reporting strong double digit growth in revenues and improvement in margins throughout the year. Growth came from improved monetization for Sina in the growing Chinese online advertising market. Net revenue was up 54% on a y-o-y basis to almost $1.6 billion for the year, of which advertising revenue surged 51% to $1.3 billion. Sina’s gross margins across segments improved by 8-9 percentage points for the full year. In addition, operating expenses were up “only” 40% for the year, which led the adjusted EBITDA margin to expand by around 13 percentage points to 30% through 2017. The company expects this revenue growth and improvement in margins to continue through 2018 as well. We have created an interactive analysis that summarizes our forecasts for Sina. The image below shows one of the key steps in identifying Sina’s valuation sensitivity to changes in its segment revenues. We detail how changes in revenue or segment EBITDA margin impacts total EBITDA, which then impacts enterprise value (assuming a constant EBITDA multiple).

Sina’s stock price surged from around $70 to $125 in the latter half of 2017 owing to strong results through the year coupled with the company reducing its debt load. We have revised our long-term price estimate for Sina to $94 from just over $84 previously. Our new price estimate is still around 15% lower than the current market price. The upward revision was driven by the strong results, as well as the expectation for a sustained period of high growth in the coming quarters. Our forecasts for the year are summarized in our dashboards for Sina. If you have a different view, you can modify various inputs to see how updated forecasts and estimates impact the company’s valuation.

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?

 

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