Why Sina’s Revenues Will Likely See Only A Marginal Growth in 2020

SINA: Sina logo

Sina (NASDAQ: SINA) generates most of its revenue from Weibo, but a smaller portion comes from its own portal sites.  Sina’s Advertising revenues, which are derived from online advertising and marketing, including display advertising and promoted marketing, is expected to contribute $1.8 billion to 2019 revenues, making up 84% of Sina’s $2.1 billion in revenues for 2019. The Non-Advertising revenue contribution is about 16%, where revenues are derived from loan facilitation services, online payment services, Weibo fee-based services, live streaming, and game-related purchases. Sina’s Advertising revenues will provide $880 million, which is 83% of the $1.1 billion in total revenue the company is expected to add between 2016 to 2019.

For fiscal 2019, we expect Sina to report a decline in overall revenues due to ongoing softness in the digital advertising market. This coupled with escalating tensions between the U.S. and China, led to a drop of 30% in the company’s stock in 2019. We have created an interactive dashboard Sina Revenues: How Does Sina Make Money?, where we discuss Sina’s business model, followed by sections that review past performance and 2020 expectations for Sina’s revenue drivers and competitive comparisons with Baidu.

Sina’s Total Revenue has grown 105% from $1 billion in 2016 to almost $2.1 billion in 2018 but is expected to grow marginally in 2020

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  • Sina has added over $1 billion to its revenue over the last two years.
  • However, weakness in the Advertising segment and marginal growth in Non-Advertising segments could only add $20 million in revenue in 2020.

(A) Revenue from Advertising segment to grow slightly in 2020, with its share of Total Revenue expected to remain at 83% by 2020

  • Overall, Sina’s Advertising revenue increased from $870 million in 2016 to $1.8 billion in 2018, driven by Weibo Advertising revenues, partially offset by Sina’s core portal advertising revenues.
  • However, we expect revenue to grow marginally to about $1.8 billion in 2020, driven by Weibo’s ongoing soft demand in advertising from small and medium enterprises and pressure from rival short-video platforms. This indicates a dim outlook for Sina as well, given that the majority of its business is derived from Weibo.
  • Advertising sales contributed 84% of total revenue in 2018. This share is expected to decline slightly to 83% by 2020.

(B) Revenue from Non Advertising segment to increase 12% (adding about $40 million) in 2020, with its share of Total Revenue expected to reach 17% by 2020

  •  Segment revenue increased from $160 million in 2016 to $319 million in 2018, driven by small acquisitions and fintech services.
  • We expect revenue to grow by about 12% to about $358 million in 2020, likely driven from Fin-Tech offerings to Weibo and consolidation of segment asset operations. Both Weibo and Sina are diversifying their core businesses away from digital advertising. Weibo is growing its value-added services (VAS) unit with the live video streaming platform.
  • Non-Advertising sales contributed 16% of total revenue in 2018. This share is expected to increase slightly to 17%, staying at similar levels by 2020.

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