SINA Corp (NASDAQ: SINA) To Release Q2 Earnings Tomorrow

Tomorrow SINA Corp (NASDAQ: SINA) will announce its second quarter earnings report. The consensus estimate from analysts for earnings per share is $0.00 a share. This estimation has held constant for the past month, but it is a decrease from the estimation of $0.09 from three months ago. For the entire year, analysts are predicting earnings of $0.34 a share. For the second quarter, revenue is estimated to clock in at $179.2 million, which is an increase of 14 percent from the revenue of $157.5 million the same quarter one year ago. By the end of the 2014 fiscal year, revenue is expected to hit $764.2 million.

Last quarter, SINA reported a loss, which broke the two-quarter long streak of profitability.

About 58% of analysts gave SINA a Buy rating. While this percentage represents the majority, it is still lower than the average rating of nine similar companies in the industry, which have an average of 70% ratings of Buy.

Additionally, T.H. Capital just recently slammed SINA with a Hold rating. Now, the analyst firm holds a $75.00 price target on the company’s stock. Analysts at Deutsche Bank also reduced their price target on SINA to $60.00 from $80.00. Overall, the company has $79.40 as the consensus target price.

Last quarter, SINA reported earnings per share of $0.15, which reached the consensus estimate of $0.15. The company’s quarterly revenue was $171.50, which beat out predictions for $165.03 million. The same quarter one year ago, the company reported earnings per share of $0.02. SINA’s revenue had increased by 37.9 percent year over year. Analysts had predicted an average earnings per share of $0.81 for the 2014 fiscal year.

SINA Corp is a Chinese online media company that serves China and the Chinese communities all over the world. It has a digital media network comprised of its online portal SINA.com, its mobile portal SINA.cn, and its social media platform Weibo.com

Weibo Corp (NASDAQ: WB)

Analysts are expecting Weibo to post $76 million in revenue and a loss in earnings per share of $0.03. This past quarter, Weibo’s stock has been trading between $17.50 and $24.50, and has jumped around $20.00 during the past month of trading. This normalization shows that the market is generally neutral on the stock.

Some investors are claiming that the rise of social media in China will drive Weibo’s growth in a similar way to that of Twitter (NYSE: TWTR). Perhaps Weibo will see an even more explosive growth, since it is a vital channel for self expression for millions of Chinese users and an important method of communication for government entities to contact their constituents.

On the other hand, the trend of users moving away from micro blogging and traditional social networks to mobile messaging apps could stop Weibo’s growth over time, because the money from advertisements follows the trend of usage.

Even with Weibo’s solid near term financial growth, the market may not necessarily give operating expenses them importance it should. Thus, it seems that Weibo is hiding its faltering operating metrics with near term headline gains.

The Importance of Operating Metrics

Weibo’s revenue depends directly on its user-time spend, the number of active users per month, and the amount of advertising dollars spent by the advertisers. The company’s main issue is that its PC active user growth is slowing down as a result of the switch to mobile, while PC still makes up 70 percent of its total revenue.

The stagnating PC user base and the level of engagement erects several hurdles to the advertisers. Mainly, there is no appeal to advertisers for them to invest in Weibo’s PC platform because of sustainability questions. However, if the advertisers focused their budget to mobile, there would be a larger pool of candidates and they would naturally be drawn to the platform that has the strongest user engagement and user growth metrics.