SINA Drops After Another Solid Quarter

SINA black and red logo

SINA Corp. (NASDAQ: SINA) announced better-than-expected second-quarter 2018 results early Wednesday, including broad-based strength both across its core business and from its Weibo microblogging platform. Still -- similar to last quarter's seemingly unjustified decline -- shares are down around 6% today as of this writing.

Let's dig deeper, then, to get a better idea of how the Chinese online media company ended the first half, and what investors should expect for the rest of the year.

SINA's results: The raw numbers


What happened this quarter?

  • On an adjusted (non- GAAP ) basis -- which excludes items like stock-based compensation -- SINA's net income was $66.5 million, or $0.89 per share, up from $0.70 per share in the same year-ago period.
  • Though we don't usually pay close attention to Wall Street's demands, these results compared favorably to consensus estimates for adjusted earnings of $0.69 per share on revenue of $535.3 million.
  • Advertising revenue climbed 54% year over year to $454.1 million, largely driven by a 69% increase in Weibo ad and marketing revenue.
  • Non-advertising revenue climbed 31% to $83.3 million, driven by higher Weibo membership fees, live broadcasting, and SINA's fin-tech businesses.
  • The company generated cash from operations of $16.4 million.
  • Upon the June 30, 2018, expiration of its previous $500 million repurchase program authorized in February 2016 -- under which SINA bought back 3.4 million shares for $302.6 million -- SINA's board approved a new $500 million repurchase plan good through December 2019.

What management had to say

SINA chairman and CEO Charles Chao stated:

During the subsequent conference call, management noted that both SINA and Weibo have faced challenges driving advertising growth within the small and medium enterprise (SME) market segment, as well as headwinds from unfavorable foreign exchange rates. Further, he added that the second half may be more challenging despite some improvements on the SME end, and given harder year-to-year comparisons on exchange rates.

Looking forward

Still, Chao noted that SINA's full-year revenue should fall within the guidance range they provided in February , which called for between 14.5 billion renminbi and 15.5 billion renminbi (or $2.12 billion to $2.27 billion at current exchange rates). However, consensus estimates had predicted SINA's full-year sales would be closer to the high end of that dollar range -- perhaps an unsurprising disparity considering SINA's relative outperformance in the first half.

In the end, though, there was nothing in this report that should have dissuaded bullish investors from owning the stock. And I think long-term shareholders should still be content with where SINA stands.

10 stocks we like better than Sina

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Sina wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 6, 2018

Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends Sina. 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.

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

More Related Articles

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.