Opportunity or trap? The news of Alibaba buying 18% of Sina (
) who has a core foothold in the micro-blogging space has not
only Sina but others in the Chinese Internet sector booming.
The combination of blending the Sina and Weibo platform with the
ability of Alibaba in ecommerce along with electronic payments
presents an interesting opportunity for this China
A quick look at some core names in the space with some of my
The move today brings a breakout in the China internet indices
overall after months of range bound charts after lows of
December. The Chinese internet sector was under the cloud of an
SEC investigation into the lack of transparency into accounting
The sector multiples have come down dramatically in some cases
as leaders are challenged by changing landscape to mobile and
power of Twitter and online video losing luster.
This dynamic is a microcosm of what has and will continue to
play out in the U.S. with Google (
), Apple (
), Microsoft (
) - they own Weibo which is Twitter in China. Huge growth
and first mover locally and has a cultural advantage. The $57
level is a major level for the stock and right where it shot to
this morning before pulling back. I'd be cautious at these
levels and with a 95X P/E, despite that the integration with
Alibaba is very positive for both companies. This is a powerhouse
ecommerce and online payment combo player now.
) - There is very good support for the stock at $81-83
level and this could be a place to buy but with a need for a
tight stop within 5% of your entry. The shares are cheap at 15X
but this may be a signal that the multiple is going lower after
years trading around 60x P/E when the net was growing in
Growth has gone from 50-70% over a decade to 8% in Q1 and will
be a continued issue for investors. Like Google, BIDU is spending
a lot of money to maintain their market share in search as mobile
becomes the dominant medium.
) - This is the 3rd largest search engine. They just
announced Q1 numbers this morning and they are beating on ad
sales. A 23x P/E multiple is fair for this company.
Youku Tudou (
) - This is the " YouTube of China". They have never made
money and it's difficult to get excited on the stock until they
can monetize their position in the marketplace. This was $67
stock in April 2011, now trades at $20.0.