Why sina shares undervalued by Wall Street?

the author: Hou Xiaotian

alibaba announced to buy a 18% stake in sina weibo, pricing to sina weibo is $3.256 billion, sina’s share price should be according to the price of around $73. The $73 including sina weibo shares have 71%, portal, and the cash account. But sina’s stock price is less than $60. Such a big gap is caused by what? Is ali’s pricing is wrong or don’t understand on Wall Street.

in terms of pricing, based on the analysis of the intrinsic value of the sina weibo, we feel that alibaba to sina weibo is not high priced. The value of sina weibo can be reflected from the following five aspects:

1, the market monopoly weibo

weibo in the Chinese market in a monopoly position, no doubt. Chinese user accounts for the time spent on the sina weibo microblog users to use 85% of the total time, it has nearly more than 500 million registered users. longitudinal Make the tencent weibo, but its utilization rate is not high. So, we believe weibo barriers to entry is high; The barriers to entry is engaged in the media, blogs and other business accumulated, not other portal with flow can be achieved overnight.

2, microblog is a platform of real life

weibo users is not just the truth of the user’s personal information such as name, phone number, more important is that these users on twitter to build a small life. They voluntarily share their own here, including what, eat what, went to where, who is his friend, what is his opinion, and so on. Weibo has become the user’s life platform, records the life of people, behavior, opinions. As a result, we know that people in the weibo is not a code, but a living person. They passed, reading, writing, turn, comments to communicate with other real people. This platform is very strong, so users of commercial value is very high.

3, weibo has the character of web content generated by

from a search perspective, the traditional search is a heap of index of link, the user doesn’t know which one is more in line with their own needs, so to yourself to click and screening; To search in weibo, users get is just one of the answer to the question, is more of a knowledge rather than the index. So we call it is the content of the Web 2.0 era. The content is made up of weibo users and registered professional company jointly created in weibo, it is more focus on the answer to the problem. Such search results more in line with the needs of users, more attractive to the user.

every day now on sina weibo search requests of more than 4000 ten thousand times. Roughly 400 million times compared to alibaba, baidu is about 800 million times, though sina weibo scale is still small, but it is just beginning for less than a year, rapid development speed.

4, weibo is wireless mobile terminal entry

weibo traffic at around $1 billion a day, baidu more than 800 million; While 75% of twitter traffic from mobile terminal. So weibo has become an entrance to wireless Internet. There is few really holds the wireless access products.

5, weibo “since the media platform” attribute of the

in the present Internet new media, weibo has become a more than 500 million users since the media platform. Every day the average time each user on twitter is about 20 minutes, or concern or comments they are interested in the characters and events. Media consumption is an essential part of people’s life; And sina weibo is meet the demand of the important source, cannot be replaced.

although weibo asset attributes is unique, but still be on the basis of pricing. We are in the most obvious “search” as the basis, the search volume of 40 million times a day is approximately 5% of the baidu, if simple use 5% multiplied by baidu’s market value, the result would be about $2 billion valuation, but because of the content is more useful than the contents of the baidu index, and the authenticity of the user, so its valuation can be doubled to around 4 billion. Therefore, alibaba is given the price of $3.256 billion between 2 billion and 4 billion, high-end, is reasonable.

but investors now but I do not agree with the $73 valuation, sina shares on the market only $50, $73 does not reflect its proper value. Here is full of more.

in the first place, although investors think ali weibo is a good thing, but because they have a lot of problems didn’t get a clear answer, they don’t know what the investment means to weibo. In operations, for example, alibaba and sina together exactly what to do, what to do, what is schedule, how can the economic benefits of; In management, alibaba will not intervene or weibo management and the board of directors, and so on.

for these operations, management and future income cash problems in addition to a press release paper, company did not give a specific answer; Does not help the investors of risk analysis, right judgement. From the secondary market investor point of view, after the past two years to almost strands of corporate governance in question, they accept risk has smaller space, don’t want to just for a promise to pay the price for the future. Most of them want to see really weibo performance, only to inputs.

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