WB - Deeply Undervalued Weibo Stock Is Ripe for a Reversal | Benzinga
Weibo (NASDAQ: WB) stock is deeply undervalued and ripe for a reversal. The stock is trading at only 5x its earnings, the lowest among China's social media operators, and analysts see nothing but upside. Tepid results or not, China's slow recovery or not, downward trending sentiment or not, this market has overextended and is set up to reverse.
The price action following the Q4 results isn't robust but shows support at a critical level, higher than the previous three bounces, aligning with the 6 and 30-day EMAs and a launch pad for higher prices. The question is whether the market will follow through on the signal or if Weibo remains range-bound until later in the year.
Weibo Struggled in Q4 But Is Set Up with Leverage for Recovery
The primary negative in the Weibo story is that the recovery is unfolding slower than expected. The company grew in Q4 and outperformed the consensus by 150bps but is not expecting a significant acceleration soon, and whisper figures were hoping for more.
Sluggishness in China's economy is impacting internet traffic and consumer spending, which is not improving as hoped, and competition is rising. However, ad sales grew by 3%, compounded by a 5% gain in ...