According to Laureate Trust, China's Sina (SINA) is preparing to IPO Weibo, it's version of Twitter with an US$8 billion valuation, for this reason Sina (Sina) stock could soar 50% in market price.
Laureate BVI values Weibo IPO between US$6 billion to US$10 billion based on similar social media platforms such as Twitter (TWTR) and Facebook (FB).
Laureate reports, shares of Sina (NASDAQ: SINA) the parent company of Weibo are currently trading at US$66.72. Sina (SINA) has a 1-year low of US$45.54 and a 1-year high of US$92.83. The stock's 50-day moving average is US$69.76 and its 200-day moving average is US$78.75.
Sina reported fourth-quarter 2013 profits of 39 cents per share which beat Zacks Consensus Estimate of 44 cents per share. Revenues increased 7.0% yoy to US$192.3 million, however Zacks Consensus Estimate was for US$197.0 million.
"It's important to note that US$71.4 million of the US$192.3 million of Sina Corp's earnings came from Weibo, it's microblogging property," according to Laureate BVI CEO Peter Tasca.
Tasca further states, "If you break down Weibo's US$71.4 million in earnings you see explosive growth this asset. It's ad revenue increased 163% yoy to US$56 million and its non-ad revenue grew 114% to US$15.4 million, this division is worth more than its parent company Sina."
Laureate's research states, Sina is an attractive buy due to its access to Weibo. Sina owns 71% of Weibo, with a current market capitalization of US$4.55 billion and Weibo estimated market Capitalization of US$6.0 to US$8.0 billion, Sina target price is US$90.00.
Tasca states, "Sina target price is based on the valuation given to Twitter (TWTR) which trades at 45 times sales and Facebook (FB) which trades at 23 times sales. "
Laureate reports, another distinctive factor to Sina spinning off Weibo is that it could become an acquisition target for Alibaba which already owns 18% of the company.
Weibo IPO is expected to be released in June of 2014, Laureate is issued a buy recommendation on Sina with target price of US$90.00 for the stock.
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