Weibo’s stock isn’t keeping up with the company’s performance
Chinese social media platform Weibo (Nasdaq: WB) has been doing relatively well as a company, but the stock hasn’t followed suit. In fact, the stock has fallen sharply over the last year and a half. After reaching a high of $142.12 in February 2018, the stock lost over 75% of its value.
The weekly chart shows the steep decline and the various resistance levels the stock will face from its moving averages. The stock was in oversold territory based on the 10-week RSI and the weekly stochastic readings, but the RSI has recently moved out of oversold territory while the stochastic readings remain there.
The Relative Strength Rating from Investor’s Business Daily is a 12 and that means the price performance is in the bottom 12% of stocks for the past year. The Tickeron Price Growth Rating for this company is 94, indicating slightly worse than average price growth. WB’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents. A rating of 1 points to highest price growth (largest percent return), while a rating of 100 points to lowest price growth (smallest percent return).
The daily chart shows that the stock jumped recently after the company beat its earnings estimates and that moved the daily overbought/oversold indicators out of oversold territory and up to overbought territory.
The recent spike caused the stock to move above its upper Bollinger Band and according to the Tickeron Technical Analysis overview, when the higher Bollinger Band was broken the stock has a 70% chance of moving lower over the following month.
From a fundamental perspective, Weibo has performed better as a company than the stock. The Tickeron SMR rating for this company is 12, indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents.
Sales have increased by a rate of 56% per year over the last three years, but they were only up by 1% in the most recent quarterly report. The profit margin is a hefty 41.3% and the return on equity is a strong 42.5%.
One issue for Weibo is that the earnings were growing at a rate of 83% per year over the last three years, but they dropped by 9.3% in the most recent quarter. This has lead to a Tickeron PE Growth Rating of 86, pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents. A rating of 1 indicates highest PE growth while a rating of 100 indicates lowest PE growth. With the declining earnings, the Tickeron Profit vs. Risk Rating for Weibo is 86, indicating that the returns do not compensate for the risks.
With the dramatic decline in the stock, the sentiment toward Weibo has become decidedly more bearish in the last nine months. Last November there were 19 analysts following the stock with 16 “buy” ratings, two “hold” ratings, and one “sell” rating. Now there are 26 analysts following the company with 12 “buy” ratings, 13 “hold” ratings, and one “sell” rating.
The short interest ratio has been moving higher over the past year and is currently at 5.92. Last year at this time the ratio was at 2.33 and it wasn’t above 5.0 until this past March. This move in the short interest ratio is indicative of increasing bearish sentiment.
WB's RSI Indicator ascends from oversold territory
The RSI Indicator for WB moved out of oversold territory on April 26, 2023. This could be a sign that the stock is shifting from a downward trend to an upward trend. Traders may want to buy the stock or call options. The A.I.dvisor looked at 39 similar instances when the indicator left oversold territory. In of the 39 cases the stock moved higher. This puts the odds of a move higher at .
Technical Analysis (Indicators)
Bullish Trend Analysis
The Stochastic Oscillator demonstrated that the ticker has stayed in the oversold zone for 1 day, which means it's wise to expect a price bounce in the near future.
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where WB advanced for three days, in of 285 cases, the price rose further within the following month. The odds of a continued upward trend are .
WB may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on May 25, 2023. You may want to consider selling the stock, shorting the stock, or exploring put options on WB as a result. In of 88 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for WB turned negative on May 25, 2023. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 54 similar instances when the indicator turned negative. In of the 54 cases the stock turned lower in the days that followed. This puts the odds of success at .
WB moved below its 50-day moving average on May 18, 2023 date and that indicates a change from an upward trend to a downward trend.
The 50-day moving average for WB moved below the 200-day moving average on May 03, 2023. This could be a long-term bearish signal for the stock as the stock shifts to an downward trend.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where WB declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
The Aroon Indicator for WB entered a downward trend on May 16, 2023. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
Fundamental Analysis (Ratings)
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is fair valued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (1.056) is normal, around the industry mean (21.614). P/E Ratio (14.286) is within average values for comparable stocks, (40.835). Projected Growth (PEG Ratio) (0.533) is also within normal values, averaging (3.151). Dividend Yield (0.000) settles around the average of (0.023) among similar stocks. P/S Ratio (2.051) is also within normal values, averaging (10.046).
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating fairly steady price growth. WB’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating that the returns do not compensate for the risks. WB’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 93, placing this stock worse than average.
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