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Weibo ( WB ), the “ Twitter ( TWTR ) of China,” saw its stock surge Wednesday on speculation that China e-commerce titan Alibaba Group ( BABA ) might boost its stake in the rising social media service. Weibo stock was up 11% in afternoon trading in the stock market today , near 20. Weibo was spun off in 2014 by Shanghai-based Web portal Sina ( SINA ) which still owns the majority of Weibo’s stock. Alibaba also has a strong stake in the company. With about a 20% ownership of Weibo as of now, “investors naturally believe Alibaba has interest (in) Weibo ultimately,” ITG Investment Research analyst Henry Guo told IBD via email on Wednesday. In May 2015, Summit Research had downgraded Weibo on concerns of increasing competition from other social networks, including from China Internet giant Tencent Holdings ( TCEHY )-owned WeChat. Summit also pointed to Weibo’s sluggish efforts to monetize and the China microblog’s too-pricey valuation back then. Weibo owes much of its current success to a surge in mobile users. Monthly active users rose 34% year over year to 236 million in December, with 83% of those users connecting with mobile devices. Weibo last month reported Q4 earnings that beat expectations. Weibo’s Q4 beat came with light Q1 sales guidance of $111 million to $116 million, up 15% to 20% year over year but below Wall Street’s expectations of $118.2 million, almost a 23% rise. The stock is forming a cup-type base with a potential buy point at 20.66. The pattern is within a much longer consolidation. Weibo stock has traded below its all-time peak of 26.08 since September 2014. Weibo still carries a strong IBD Composite Rating of 96 out of a possible 99. The company went public in April 2014 at 17 a share. After spiking on the initial public offering, shares flattened out, eventually sliding to an all-time low of 8.78 in August 2015, during China’s stock market crash . Sina stock was up 3%, near 49 in afternoon trading on Wednesday. Alibaba stock was up 2%, near 79 and Twitter stock was up 2%, near 17. Scalper1 News
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