Renee L. Yuning, ENTscope Staff Writer

After second quarter’s amazing financial report, Weibo has exceeded its previous performance in the third quarter. Quarter’s total revenue reached 176.9million dollars, with year-on-year growth of 42%; the net profit was 32.1 million dollars, with year-on-year growth of 122%, which was continuously beyond analysts’ expectation.

Twitter vs Weibo 1.png

Source: Venturebeat

It was astonishing that Weibo, as an underdog for past years, got its second wind in 2016.

Seeing Weibo’s performance in American capital market, Twitter must feel tough to swallow. While Twitter shares are down 18% year-to-date and have fallen 75% from their late-2013 peak, Weibo is up 127% for the year so far. And that’s with a 21% pullback from last month’s high.

This comparison has given rise to investor’s attention. Some financial medias, including Bloomberg and Motley Fool, have posted their opinions about why Twitter and Weibo were heading into two different paths.

1. Twitter’s attempts to kiss up to advertisers were totally in vain

Twitter were stuck with the mire of acquisition.  When the news was first released, Twitter’s stock price has gone up for a while. After all the potential investors announced their quit, the price declined sharply. At that time, Twitter’s CEO Jack Dorsey was acting as a CEO in Square as well. It was hard to believe that Twitter was took care of by a part-time CEO at this important moment.

“Our strategy is directly driving growth in audience and engagement, with an acceleration in year-over-year growth for daily active usage, Tweet impressions, and time spent for the second consecutive quarter,” said Twitter CEO Jack Dorsey. Though Twitter tried to fight with the doubt, it’s worth noting here that the company still doesn’t turn a profit. Because of the generous stock option incentive plan, Twitter was still substantially loss-making according to US GAAP. The newly launched advertisement strategies had no effect. For example, Twitter tried to lower the charge of special interaction service, including clicks, replies, retweets and likes, but small enterprises had no response towards this decision, instead Twitter lost tons of money because of this remission.

twitter-vs-weibo-2

Source: Venturebeat

The Moments function, which displays the hottest news to all users, looks awkward because advertisers were more willing to put their money in Snapchat’s Live Stories and Instagram’s Stories page. Twitter was also attempted to create a whole video ecosystem by adding Periscope and Vine into its group. But still, they were ending up with failing to attract advertisers.

2.Why Weibo’s stock price has outridden Twitter’s?

Based on the recent financial reports, Twitter’s MAU has increased 3% to 317 million, while Weibo’s MAU has increased 33% to 282 million. The statistics reflected the operation status of these two companies. To simply conclude, the reason why Weibo’s stock has outpaced Twitter’s is because Weibo is profitable and Twitter is not.  Though Twitter’s most recent EPS was 13 cents, operation profit could not explain all the problems. After summing up the whole expenses, Twitter’s losses were 102.9 million dollars. On the contrary, Weibo gained 7.1 million dollar’s profit in the second quarter of the year, logging a fourth straight quarter of real GAAP profits.

screen-shot-2016-12-08-at-2-56-17-pm                                                                                         Source: Zacks Investment Research. 

For the next article, I will analyze more about the similar and difference between Twitter and Weibo concerning the products’ features and cultural discrepancy.

 


 

Want to see how Chinese money rushed into Hollywood market? We will offer some in-depth analysis in the upcoming ENTscope article:  Right after Wanda’s step, Chinese copper firm acquired the Hollywood’s independent filmmaker Voltage, producer of ‘The Hurt Locker’

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