Weibo’s revenue rose above pre-pandemic levels last year, but its profitability lagged due to heavy spending
The company trails Meta in its ability to monetize users, and is very much in the shadow of local rival WeChat in terms of total user numbers
By Ken Lo
Weibo Corp. WB, often called the Twitter of China, has reported strong revenue growth for 2021, showing it can play with the big boys, including the real Twitter TWTR and other major global peers. But like those same rivals, the company faces the far larger challenge of not only in attracting new users, but squeezing more money out of them to boost its profitability. It also faces more unique challenges due to its limitation to China, a huge but also sometimes challenging market due to strict government oversight.
The company reported revenue of $2.26 billion last year, up 33.6% compared with 2020. Its net profit grew by an even larger 36.7% to $428 million. All that seems fine, until you consider the low base figure from 2020 at the start of the pandemic. In fact, last year’s revenue was 27.7% higher than pre-pandemic levels in 2019. But the company’s net profit declined by 13.4% over that period, showing its profitability has not fully recovered to pre-pandemic levels.
The shortfall owes to its big spending last year, totaling $1.56 billion to be precise. That was 30% higher than the roughly $1.2 billion average spending in the previous two years, as the company incurred heavier costs related to personnel and marketing. Such a spending jump on new initiatives is necessary given the need to maintain and consolidate its place in a China advertising market that remains unstable even as the pandemic eases.
Its advertising and marketing revenue totaled $1.98 billion last year, up 33.6% from 2020 and accounting for 87.8% of its total. Its second biggest revenue source was value-added services, which yielded $276 million last year, accounting for 12.2% of total revenue. The last three years have seen advertising as a share of total revenue hold steady at around 87%, lower than the 97.5% for Facebook owner Meta FB, the world’s biggest social media company.
Despite underperforming Meta in terms of profitability, Weibo beat out its original role model Twitter, which logged a loss last year. Weibo’s net profit margin was around 19%, lower than Meta’s 33.4%, mostly because of the noted increase in costs.
Low revenue per user
Even when factoring in the five-times-difference in per-capita income between the U.S. and China, Weibo still has a lot of catching up to do in user monetization. Weibo also has a basic drawback to its global peers in its reliance almost exclusively on China, where regulatory risk is high, unlike Meta and Twitter that are globally diverse.
Weibo’s limited prospects are reflected in its valuation. The company’s latest price-to-earnings (P/E) ratio is 14.2 times, slightly lower than Meta’s 15.5 times. Its price-to-sales (P/S) ratio of 2.7 times is half of Meta’s 5.7 times, and much lower than Twitter’s 20 times, even though Twitter lost money last year.
In the six years from 2016 and 2021, Weibo’s monthly active users grew 83% from 313 million to 573 million, representing an annual compound growth rate of 12.9%. By comparison, WeChat’s monthly active user base more than tripled over a five-year period from 300 million in 2013 to 1.1 billion in 2018, representing annual growth of 25.3% – more than twice that of Weibo. The growth has slowed since then due to market saturation, with the company now reporting 1.27 billion MAUs – roughly four times the size of Weibo.
WeChat’s approach to attracting users is different from Weibo’s, relying more on the use of applets and financial-related services that have helped to boost its popularity.
Weibo has realized its own shortcomings and is working to close the gap. It wants to draw more diverse and dynamic user groups by further diversifying its content. Prompted by the popularity of video, it is recruiting more video content creators in hopes of competing with the likes of far younger video apps like Kuaishou (1024.HK) and Douyin, the Chinese edition of TikTok. Weibo now boasts 46 vertical content fields including celebrities, entertainment, jokes, fashion, cosmetics, finance and gaming, where the number of daily viewers is growing about 20% annually.
Second listing in Hong Kong
Originally listed in the U.S. in 2014, Weibo made a second listing in Hong Kong late last year and raised around HK$1.9 billion ($244 million). It said it would spend 45% of the funds to expand its user base and user participation, while 25% would go to R&D and enhancing its user experience and monetization capabilities. All that shows the company sees improved user experience and content diversification as two top priorities.
The company’s purchase of an interactive entertainment company and online gaming businesses in the fourth quarter of 2020 are positive first steps to achieving those goals, and helped to drive a 36% rise in its value-added service revenue last year. Continuation of the trend could hinge on how quickly and efficiently it uses the funds from its Hong Kong IPO to make its platform more popular and better monetize its users.
U.S.-listed Chinese stocks have been haunted by the potential of forced delistings from New York in recent years, and Weibo was singled out as facing such a risk when its name appeared on a list published by the U.S. Securities and Exchange Commission (SEC) in March. The company’s stock fell a combined 6.4% in two days after that happened.
Despite rebounding somewhat since then, the HK$206.80 Monday close for the company’s Hong Kong traded shares represented a 24% decline from its Hong Kong IPO price of HK$272.80 just four months earlier. Last week the company announced a plan to buy back up to $500 million worth of shares in the next 12 months to shore up the price. But more diversification and better user monetization will be the real keys to winning back investors over the longer term.
Sen. Elizabeth Warren Questions Fidelity on Crypto 401(k) Product: What You Need to Know
Sen. Elizabeth Warren (D-Massachusetts) is calling on Fidelity Investments to explain its decision to allow its investors to add Bitcoin BTC/USD to their 401(k) retirement accounts.
What Happened: Warren and Sen. Tina Smith (D-Minnesota) sent a letter to Fidelity CEO Abigail Johnson expressing concern about the company’s new Digital Assets Account, which allows investors to have a portion of their retirement savings allocated to Bitcoin through their 401(k) plan. The senators claim Fidelity ignored a U.S. Department of Labor warning to 401(k) plan fiduciaries to exercise “extreme care” when deciding to include cryptocurrency as an investment vehicle.
“Investing in cryptocurrencies is a risky and speculative gamble, and we are concerned that Fidelity would take these risks with millions of Americans’ retirement savings,” the senators wrote, adding that “Bitcoin’s volatility is compounded by its susceptibility to the whims of just a handful of influencers. Elon Musk’s tweets alone have led to Bitcoin value fluctuations as high as 8%. The high concentration of Bitcoin ownership and mining exacerbates these volatility risks. One study estimates that just 10% of Bitcoin miners are responsible for processing 90% of Bitcoin transactions and that 1,000 individuals control 3 million Bitcoins – about 15% of the current Bitcoin supply.”
What Else Happened: The senators also questioned if the company had a conflict of interest because it was involved in crypto mining.
“Despite a lack of demand for this option – only 2% of employers expressed interest in adding cryptocurrency to their 401(k) menu – Fidelity has decided to move full speed ahead with supporting Bitcoin investments,” they said.
The senators gave Fidelity until May 18 to answer questions regarding risks related to cryptocurrency and whether this offering posed a conflict of interest.
The Wall Street Journal reported Fidelity responded to the senators’ concerns via an emailed statement.
“As a Massachusetts-based company with a proven 75-plus-year history of doing what’s in the best interest of our customers, we look forward to continuing our respectful dialogue with policy makers to responsibly provide access with all appropriate consumer protections and educational guidance for plan sponsors as they consider offering this innovative product,” the company said. “Consistent with our ongoing dialogue with regulators and policy makers, we will respond directly.”
Photo by Gage Skidmore / Flickr Creative Commons
Original Source: benzinga.com
OgenaShield Pure Oxygen(R) HD Shampoo Now Available on Amazon
SARASOTA, Fla., April 28, 2022 (GLOBE NEWSWIRE) — Ogena Solutions is pleased to announce that our OgenaShield Pure Oxygen(R) HD Shampoo is now listed for sale on Amazon.com (US only). View our listing.
About OgenaShield Pure Oxygen(R) HD Shampoo
Ogena Solutions Pure Oxygen(R) HD Shampoo is a 100% non-toxic, environmentally safe, and veterinarian-recommended way to clean and deodorize dogs, cats, horses and cattle. This rinse-free, fragrance-free animal shampoo converts to oxygen and water vapor, leaves absolutely no active residue and works gently to relieve the animal’s itchy and irritated skin. Besides being excellent for general shampooing Pure Oxygen(R) has been specifically formulated for use in Ogena’s ANIVAC animal bathing systems and when diluted 50/50 with water can also be used in products such as the Bissell Bark Bath for dogs and the eZall and other foaming bathing system for horses.
I’m impressed with this product. Works better than any oral meds or topical or other shampoos I’ve tried in 6 years for animals with skin problems! – Lynn C.
Cleared up my dog’s infection when antibiotics wouldn’t work. Highly recommend it. – Anonymous
Fostered cats for 15 years and recently came across a ringworm fungal strain that was resistant to miconazole topical, terbinafine oral and topical, itraconazole oral and everything else on the planet. This was THE only thing that got rid of it. Miracle product. – S.T.
About Ogena Solutions
Ogena Solutions is a One Health organization focused on safeguarding animals, people and the environment from pathogens and infectious diseases. We offer a Next Generation version of PCO air purifiers, foamers, topicals, application equipment, vacuum systems, and more. All of our products meet a high standard for safety, efficacy, and efficiency, as well as expert protocols for optimum results. Our team has extensive experience working on infection prevention and biosecurity in the veterinary, farm/agriculture, animal shelter and boarding kennel sectors, and we work closely with government agencies, public leaders, corporations and small business owners to implement best practices for the health and safety of their employees, customers and the general public.
For more information, please contact:
BD & Technical Support Mgr – U.S.
1-855-900-8822 ext. 227
A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/70f25f1b-09e5-4cdc-a11c-397a94bff576
TierPoint Developing Next Generation Cloud Solutions
ST. LOUIS, April 28, 2022 (GLOBE NEWSWIRE) — TierPoint, a leading provider of secure, connected data center and cloud solutions at the edge of the internet, today announced it is working with Dell Technologies to develop next generation cloud solutions on Dell APEX.
With cross-cloud/hybrid functionality, APEX solutions provide the agility and speed customers want, combined with the control, performance, security, and consistency they need – all packaged in the simplest way possible.
TierPoint Senior Vice President of Product Development Greg Ahlheim said: “To help fuel the growth and success of their organizations, more and more CIOs are embracing hybrid cloud solutions, allowing them to run each application in the type of cloud – private, multitenant, or public – where it performs best. In addition, today’s CIOs are increasingly seeking the flexibility of pay-as-you-go models for their cloud infrastructure. Dell addresses both of these needs through its APEX offerings, and we’re excited to work with them on developing solutions that combine their technology with the exceptional, cloud-agnostic guidance, service and support for which TierPoint is known.”
The first joint solution of the two companies will be a TierPoint Private Cloud powered by Dell APEX, with continuing collaboration on other APEX-powered solutions.
Meeting clients where they are on their journey to IT transformation, TierPoint (tierpoint.com) is a leading provider of secure, connected data center and cloud solutions at the edge of the internet. The company has one of the largest customer bases in the industry, with thousands of clients ranging from the public to private sectors, from small businesses to Fortune 500 enterprises. TierPoint also has one of the largest and most geographically diversified footprints in the nation, with over 40 world-class data centers in 20 markets and 8 multitenant cloud pods, connected by a coast-to-coast network. Led by a proven management team, TierPoint’s highly experienced IT professionals offer a comprehensive solution portfolio of private, multitenant, managed hyperscale, and hybrid cloud, plus colocation, disaster recovery, security, and other managed IT services.
Contact: Pete Abel, 314-720-3129, Pete.Abel@tierpoint.com
Original Post: benzinga.com
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