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published in Blogs
Aug 26, 2019

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.

Related Ticker: WB

WB in upward trend: price may jump up because it broke its lower Bollinger Band on March 04, 2024

WB may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options. In of 43 cases where WB's price broke its lower Bollinger Band, its price rose further in the following month. The odds of a continued upward trend are .

Price Prediction Chart

Technical Analysis (Indicators)

Bullish Trend Analysis

The Stochastic Oscillator suggests the stock price trend may be in a reversal from a downward trend to an upward trend. of 62 cases where WB's Stochastic Oscillator exited the oversold zone resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .

WB moved above its 50-day moving average on March 26, 2024 date and that indicates a change from a downward trend to an upward trend.

The 10-day moving average for WB crossed bullishly above the 50-day moving average on March 13, 2024. This indicates that the trend has shifted higher and could be considered a buy signal. In of 16 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are .

Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where WB advanced for three days, in of 274 cases, the price rose further within the following month. The odds of a continued upward trend are .

The Aroon Indicator entered an Uptrend today. In of 178 cases where WB Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .

Bearish Trend Analysis

The Momentum Indicator moved below the 0 level on March 22, 2024. You may want to consider selling the stock, shorting the stock, or exploring put options on WB as a result. In of 92 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 March 22, 2024. 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 51 similar instances when the indicator turned negative. In of the 51 cases the stock turned lower in the days that followed. This puts the odds of success at .

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 .

Fundamental Analysis (Ratings)

Fear & Greed

The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.

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 (0.718) is normal, around the industry mean (17.551). P/E Ratio (5.621) is within average values for comparable stocks, (53.617). Projected Growth (PEG Ratio) (0.829) is also within normal values, averaging (3.433). Dividend Yield (0.000) settles around the average of (0.025) among similar stocks. P/S Ratio (1.297) is also within normal values, averaging (27.591).

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 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. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), 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.

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 91, placing this stock worse than average.

Notable companies

The most notable companies in this group are Alphabet (NASDAQ:GOOG), Alphabet (NASDAQ:GOOGL), Meta Platforms (NASDAQ:META), Spotify Technology SA (NYSE:SPOT), Baidu (NASDAQ:BIDU), Pinterest (NYSE:PINS), Tencent Music Entertainment Group (NYSE:TME), Snap (NYSE:SNAP), Zillow Group (NASDAQ:Z), Twilio (NYSE:TWLO).

Industry description

Companies in this industry typically license software on a subscription basis and it is centrally hosted. Such products usually go by the names web-based software, on-demand software and hosted software. Cloud computing has emerged as a major force in this space, making it possible to save files to a remote database (without requiring them to be saved on local storage device); as long as a device has access to the web, it can access the data and the software programs to run it. This has in many cases facilitated cost efficiency, speed and security of data for businesses and consumers. Alphabet Inc., Facebook, Inc. and Yahoo! Inc. are some well-known names in the internet software/services industry.

Market Cap

The average market capitalization across the Internet Software/Services Industry is 59.87B. The market cap for tickers in the group ranges from 1.11K to 1.88T. GOOGL holds the highest valuation in this group at 1.88T. The lowest valued company is MSEZ at 1.11K.

High and low price notable news

The average weekly price growth across all stocks in the Internet Software/Services Industry was 1%. For the same Industry, the average monthly price growth was 1%, and the average quarterly price growth was 36%. MRPT experienced the highest price growth at 147%, while RWRDP experienced the biggest fall at -75%.

Volume

The average weekly volume growth across all stocks in the Internet Software/Services Industry was 8%. For the same stocks of the Industry, the average monthly volume growth was -9% and the average quarterly volume growth was 2%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 44
P/E Growth Rating: 74
Price Growth Rating: 52
SMR Rating: 79
Profit Risk Rating: 91
Seasonality Score: 4 (-100 ... +100)
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