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Why Shares of Weibo Are Down Today


What happened

Shares of Weibo (NASDAQ: WB) slumped on Tuesday after the Chinese internet stock received an analyst downgrade. Tuesday's decline adds to a brutal sell-off that begin about a year ago. Weibo stock was down about 12.3% at 12:30 p.m. EST. Over the past year, shares have shed nearly 60% of their value.

So what

Analysts at Nomura Instinet lowered their rating on Weibo stock to "neutral" on Tuesday, down from a previous "buy" rating. Along with the rating cut, the Nomura analysts also slashed their price target on the stock to $64. That's down from a previous price target of $74.

A declining stock price chart.

Image source: Getty Images.

An already tumbling stock price may have something to do with this downgrade. After peaking above $140 at the beginning of 2018, shares of the Chinese company now trade for just over $50. Many Chinese stocks tumbled in 2018 , in part due to the U.S.-China trade war. Weibo did not escape that pain.

Now what

Weibo's financial results have been impressive in recent quarters. Revenue surged 44% year over year in the third quarter of 2018, and the company posted solid profit margins and growing earnings. The stock has become a lot cheaper relative to earnings over the past year, but a previously lofty valuation may have been part of the reason for the steep decline.

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Timothy Green has no position in any of the stocks mentioned. The Motley Fool recommends Weibo. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.





This article appears in: Personal Finance , Stocks
Referenced Symbols: WB



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