On February 26th, due to unsatisfactory financial results, the stock price fell pre-market after the Weibo financial report was released. Fortunately, affected by the broader market, Weibo's decline has narrowed significantly. As of the close on the 26th, Weibo's stock price fell 4.59% to $ 41.390, with a market value of $ 9.314 billion.
In Q4 2019, Weibo revenue and net profit both declined year-on-year. Faced with such a transcript, the decline in Weibo's stock price is inevitable, but will it continue to fall? This is not necessary.
Why did Weibo's stock price plunge after the financial report was released?
After the financial report is released, if Weibo's decline fails to narrow, it will set Weibo's biggest recent decline. The main reason for this situation is that the financial results have caused investors panic.
According to Meigushe, on February 26, Weibo announced the unaudited financial report for the fourth quarter and full year of 2019 as of December 31, 2019. According to financial report data, Weibo's net revenue for the fourth quarter of 2019 was US $ 468.1 million, a year-on-year decrease of 3%; net profit was US $ 95.1 million, compared with US $ 166.5 million in the same period of the previous year; the combined diluted net profit per share was 42 cents; Non-GAAP net profit is $ 176.5 million, or 77 cents per diluted net profit.
Weibo's full-year net revenue for 2019 was US $ 1.77 billion, a year-on-year increase of 3%; net profit was US $ 494.7 million, compared with US $ 572 million in the same period last year; combined net income per share was US $ 2.18; non-GAAP net profit At $ 637.5 million, the combined diluted net profit per share was $ 2.78.
Judging from the core revenue and net profit of Q4 and the whole year, the overall revenue growth slowed down and the profit dropped sharply, which caused the outside world to question Weibo's subsequent revenue and profitability.
Secondly, from the perspective of various business data, Weibo active users are increasing, but revenue is declining, which makes investors lose confidence in the commercialization ability of Weibo.
According to Weibo's financial report data, Weibo's advertising and marketing revenue in the fourth quarter of 2019 was US $ 405.9 million, down 3% year-on-year; value-added service revenue was US $ 62.2 million, down 4% year-on-year; operating profit was US $ 150.7 million, the previous year The same period was US $ 183 million; Weibo ’s full-year 2019 advertising and marketing revenue was US $ 1.53 billion, up 2% year-on-year; value-added service revenue was US $ 236.7 million, up 8% year-on-year; operating profit was US $ 597.6 million, and it was 6.093 in 2018 One hundred million U.S. dollars.
While revenue data fell, Weibo's user data rose. As of December 2019, Weibo's monthly livelihood reached 516 million, compared with 462 million in the same period last year; the average daily livelihood reached 222 million, compared with 200 million in the same period last year.
As a platform that has stabilized after many years of development, Weibo has been focusing on commercialization in recent years. The rapid growth of active data ushered in the slowdown or even decline in business revenue growth. This is proposed to Weibo. Many commercialization strategies have formed a huge negative.
Finally, the most direct reason for the real decline in Weibo ’s stock price is that Weibo said after the financial report that it was "seriously affected" by the new coronavirus epidemic. At constant exchange rates, the company ’s net income in the first quarter of 2020 is expected. A year-on-year decrease of 15% to 20%.
This foreshadowed that after its own revenue growth was hindered and affected by the epidemic, Weibo's pressure to achieve year-on-year revenue growth in 2020 will be even greater.
Three major obstacles to user activity data are good or not, limiting Weibo's appeal to investors
However, due to the irreplaceable position of Weibo in China's online social market, as the epidemic has promoted the improvement of Weibo's active data, Weibo's share price has limited downside.
At the financial report meeting, in the face of the fact that the epidemic promoted the daily activity of Weibo and the rapid increase in traffic, Weibo CEO Wang Gaofei also explained this phenomenon: the exposure of the information flow during the Spring Festival doubled compared with last year, and the holiday After the end, it increased by 50%. One of the increase in traffic is to help us return more users, and the other is to help diversify the traffic and user composition on our platform. I think the increase in Weibo traffic reflects the competitiveness of social media such as Weibo in major events. Our operations and products have responded in a timely manner. For example, when the epidemic situation just appeared, we developed the product of the epidemic alert and super talk.
The growth of epidemic information flow also shows the value of social media. We allow the media, KOL (Key Opinion Leader) and the public to participate in the discussion. We enable the media to disseminate information in a timely manner through the platform, so that KOL gets more attention, so that the voice of the public can get a response from the government in a timely manner.
Once there is a hot topic of entertainment and social topics, the daily users of Weibo can quickly improve. From 2019 to today, continuous hot topics have driven the growth of Weibo's overall active users. Financial report data shows that Weibo monthly active users reached 516 million and daily active users reached 220 million. Such a data once again stabilizes Weibo's irreplaceable market value in the Chinese social media field.
Based on this continuously improving data, as long as people continue to choose Weibo immediately after the hot topic occurs, it is not difficult for Weibo's overall revenue to maintain relatively stable development. However, in the fast-known Internet industry, soundness is a symbol of a mature company, but not necessarily a commendatory term.
In the face of giant companies with a safer market and more growth potential than Weibo, if investors are allowed to make choices in companies such as Weibo and Alibaba and Tencent, more rational investors will choose Alibaba and Tencent. If it fails to bring new imagination to investors, Weibo will gradually lose its appeal to investors.
(1) The increased traffic during the epidemic is difficult to convert into commercial value, and there is no way to sell the traffic to advertisers in a timely manner
From the perspective of Weibo's revenue structure, Weibo is a company that relies heavily on advertising revenue. During the Spring Festival epidemic, although the daily users and traffic of Weibo surged, this was not the best time for Weibo to transform its commercial value.
Compared with weekdays during the Spring Festival, this is the low season for advertising. This is a period when the advertising business of almost all Chinese Internet companies such as Tencent and Baidu will be affected. After the outbreak, Weibo CEO Wang Gaofei also admitted in the financial report meeting: The first quarter of the outbreak really affected the operation of the economy and also affected the advertising industry, especially the needs of advertisers. For example, some advertisers canceled or postponed. Demand.
During the booming period of Weibo traffic during the Spring Festival outbreak, due to the lack of effective display of advertisers and advertising content, these Weibo traffic will not only increase the server cost, but also have no way to sell traffic to advertisers in a timely manner. During the epidemic, in addition to introducing more active users to the Weibo ecosystem to activate other products and functions, the commercial value of the traffic brought by the epidemic to Weibo is not large, and Weibo can only earn in the process of user surge Shout, add dazzling data and cases to the future sales advertising business.
Once the epidemic is over, if there is no ongoing topic fermentation, the scale of Weibo's active users will also face considerable challenges if it is to stabilize.
(2) Today, the strong headlines of the Toutiao Hundreds will make a huge impact on Weibo
At the same time, Weibo's innovation progress has not achieved significant results. With competitors increasing their efforts, Weibo's follow-up to stabilize the first choice of hot topics will also be full of pressure.
During the outbreak, Baidu, Toutiao, Tencent News and other platforms quickly launched the outbreak dynamics and various services and columns based on the outbreak. Weibo, as the first platform for users to obtain information, in addition to guiding users to get help on Weibo, they There is no official service like a rival to help spread the news. After the epidemic, people will deepen their impressions of the speed of news dissemination on other platforms, affecting Weibo's position in news dissemination.
And after the hundreds of dynamics continue to reward a large number of high-quality content creators, Toutiao today also announced that the headline authors with more than 10,000 followers will open micro-headline revenue. This means that today ’s Toutiao based on algorithm recommendation is easier to get traffic, and more creators will be more likely to get income. Relying on other diversified commercial monetization channels and traffic mechanisms such as the Toutiao paid column, this will greatly increase the number of Toutiao authors The passion for creating micro-headlines in Toutiao today.
Later, when Tencent and Baijia follow up, this will pose a huge threat to Weibo's content creation ecology.
(3) It is very difficult for short video to enter the era of fast-hand vibrating duo and Weibo to try to gain an advantage again
Weibo's failure to occupy the leading market position in the short video field also poses significant challenges for future user growth and advertising revenue growth.
It can be found from the financial report that Weibo's loss in the fourth quarter has also been affected by technology. The Weibo financial report data shows that the company's impairment loss of USD 214.7 million in technology investment is not included in non-operating gains and losses calculated in accordance with non-GAAP.
Judging from the current situation, a little bit of technology has imposed a great burden on Weibo. As an important symbol of Weibo's short video strategy, the technology failed to occupy the leading market position in the short video market, which is undoubtedly unfavorable for the development of Weibo.
At one time, the second shot and the small coffee show under the technology were once the leading products in the short video market at that time, but under the rapid development of vibrato and fast hands, the influence of technology in the short video field was gradually declining. Since Tencent repeatedly pushed short videos but still blocked, it was found that the short video track has entered the era of fast hands shaking and vibrating. Even companies such as Tencent who have great knowledge in traffic and funds have not successfully broken through. Today ’s It is more difficult for Weibo to make a cut in the short video market.
From the Spring Festival Evening to the epidemic, we can gradually feel a situation that belongs to the future: the discussion of hot topics is gradually spreading on the fast-hand vibrato, and the vibrato is also an important channel for news dissemination.
If Weibo cannot establish an irreplaceable dominant position in the field of short video, it will also face fast-hand vibrato competition in the future, which may affect the active users and advertising revenue of Weibo in the future.
It is not difficult for Weibo to maintain stable development
Video belongs to the future. Depending on Weibo's user base, will Weibo make the right strategic move in the video field? This matter can still be kept on the sidelines.
Judging from the current situation, Weibo's current revenue growth is facing considerable pressure. However, Weibo has accumulated users and advertiser resources for ten years. When a continuous stream of hot topics can stabilize its position in the minds of users, Weibo actively strengthens its commercialization capabilities and constantly taps the commercial value of advertisers. It is not difficult to maintain a steady development stance in the market.
After the financial report, Wang Gaofei said that for 2020, Weibo will continue to build an ecosystem, enhance its core competitiveness, commit to creating marketing value for customers, and provide diversified profit opportunities.
According to a report by the US Stock Research Institute on February 26, Weibo recently launched the "online press conference" marketing plan, which integrates 5G live broadcast, media high-definition live streaming, multiplayer online Lianmai, social jump e-commerce And many other functions, and introduced high-quality account resources such as stars and big V, trying to help enterprises to open up marketing during the epidemic.
As long as Weibo's overall active user data remains stable, continuous commercialization and more comprehensive advertiser marketing services, it is not difficult to keep Weibo growing.
Weibo can be a profitable business company but it is not a very imaginative Internet company at present
However, if investors choose to invest in Weibo, the greater significance is also for investing in the future of Weibo. Weibo's oasis is a product that is currently receiving much market attention. Investors inside and outside Weibo attach great importance to the development of the oasis.
Judging from the overall situation of Weibo, it is not difficult for Weibo to keep making money for a long time, but how to increase its imagination space is a huge challenge. And this will also affect the market's determination of Weibo valuation.
(1) Oasis is currently Weibo ’s greatest imagination, but whether it can break through is not necessarily
At the earnings report, Jeffrey Investment Bank analysts also raised questions about oasis. Oasis, a product that is positioned as a fashionable social software, is a huge attempt made by Weibo in the field of vertical content socialization, and has attracted the attention of the outside world.
Weibo Wang Gaofei revealed that Oasis was officially launched in December. Judging from the current promotion of Weibo, MAU exceeded 10 million in January, and DAU also increased significantly. The content published and Weibo are differentiated.
At present, affected by the epidemic situation, Weibo has suspended the marketing of Oasis, focusing on product optimization. Oasis mainly excavates content suitable for users ’life interests, in the form of pictures and small videos, such as photography, food, tourism, etc. The feedback of the activeness of this part of content in Oasis is good. And photography, food, tourism, etc., this part of the content in the oasis activity feedback is good.
In fact, Oasis has been controversial since it went online. After the removal of Xiaohongshu, Oasis seized the opportunity and successfully relied on Weibo's rapid development in the fashion V and user traffic resource base, and quickly became the No. 1 product in the App Store social ranking.
But at the same time, the icon of the APP is suspected of copying the visual image designed by the South Korean studio fnt studio for the Ulju Mountain Film Festival in 2015. The product function is referred to Instagram and Xiaohongshu, allowing the oasis to grow in the beginning.
Wang Gaofei said at the financial report meeting that in the oasis commercialization, some brand customers already want to advertise in the oasis, and there will be brand customers to try at the end of the first quarter and the second quarter
At present, under the circumstances that the epidemic affects the entire large fashion consumer market, this has formed an uncontrollable obstacle to the rise of the oasis. During the period when Xiaohongshu was delisted, Oasis Promotion ushered in the highest window in history, but as Xiaohongshu was reintroduced, the epidemic oasis could not expand rapidly. Is there a better time for oasis to form a breakthrough in the fashion social field? , Which really threatens the market position of Xiaohongshu, and adds more uncontrollable factors.
(2) Poor liquidity is too dependent on advertising revenue and has bottlenecks
500 million users is currently a beautiful landscape for Weibo in terms of data. However, for a company with more than 500 million monthly active users, an average user contributes less than one dollar of revenue per quarter.
Ten years of Weibo, which has been going on for many years, has been vigorously increasing the company's commercialization, but still can only obtain such revenue. This kind of data only shows that Weibo's monetization ability is not high.
In the final analysis, this is limited by Weibo's product form and business model. Weibo highly relies on advertising, and can only activate users through topics and content that are of interest to users, and then insert ads while displaying normal content to earn revenue, but failed to form a major breakthrough in games and other fields The greater business value of users will inevitably affect Weibo's revenue.
(3) It is not easy to grasp the ecological balance to maintain stability between authors and good users.
At the same time, some netizens said on the Internet that Weibo would let users inexplicably follow a group of people. This kind of user experience is very bad. In fact, this is Weibo to provide creators with a fan benefits.
When a Weibo creator publishes a Weibo headline article, the author can set that he must pay attention to the author to see the full text. When the Weibo information flow distributes the headline articles published by the creator, the creator ’s Weibo headline articles can be pushed to many non-fan users. After seeing half of the articles, these users need to pay attention to the creator to see the full text. This time became a sharpening tool for creators.
Since many users mainly read the headline articles in this scenario, he may not be very impressed after following a Weibo account based on the article, causing users to somehow follow the Oolong events of some accounts.
As a content ecological platform, Weibo is an indispensable part of the Weibo ecosystem. However, with the rise of WeChat, Toutiao, Baijiahao and other content creation ecosystems, the bonus period of Weibo content creation has also quietly passed. Weibo needs a continuous and effective operation strategy to help creators realize better and obtain better Fans can keep the creators continuing to create, and can quickly attract scarce content to users when hot topics occur.
Only users complaining about the poor Weibo experience can be seen that Weibo, which is not very strong in terms of commercial monetization ability, is not easy to grasp the ecological balance of content and protect the rights of creators and users. If the creator cannot be more attractive from the perspective of income, or find a more reasonable method from the perspective of powder absorption, such hidden dangers may also affect the development of the entire Weibo ecosystem.
Therefore, overall, the decline in Weibo's stock price will not be a continuous thing. Based on Weibo's current unique advantage in the social media market, it is not difficult to maintain a stable and profitable state. But if we want to achieve a breakthrough in stock prices and market value, we also need to give investors new imagination in terms of commercialization capabilities and ways to monetize.
Source of this article: US Stock Research Institute aims to help Chinese investors understand the world, focus on reporting US technology stocks and Chinese stocks, and friends interested in US stocks quickly follow us
