Bottom line: Weibo and its stock could remain under pressure for some time to come, potentially a long time if its new Oasis platform doesn’t provide the kind of relief that it is hoping for.

Weibo looks to Oasis for relief

With corporate earnings in the spotlight, I’ve decided to zoom in this week on the Twitter-like Weibo (Nasdaq: WB), pursuit the release of its quarterly results a week ago. As a long-time China tech watcher, I particularly like Weibo for its worthiness to reinvent itself, and like to think of it as “The little visitor that could, then couldn’t, then could again, then couldn’t” and so on.

Hopefully I’m not dating myself with that reference to the American diaper archetype “The Little Engine That Could,” well-nigh a train that overcomes various obstacles to show the world its true abilities. But the marrow line is that Weibo has reinvented itself at least once in its unenduring lifetime that began with a zinger a decade ago. It’s currently trying to do that then with a new soon-to-launch product tabbed Oasis, which I’ll examine increasingly closely in the second half of this column.

The fact that Weibo is still working and doing relatively well testifies to its worthiness to find new relevance in China’s ever-changing internet — no easy feat where the latest craze often appears overnight, only to fade and die two or three years later. Many compare the visitor to Twitter (Nasdaq: TWTR), and as a user of both I can testify to the similarities. That’s no coincidence, since Weibo’s initial meteoric rise was a uncontrived offshoot of the blocking of Twitter in China in 2009.

The two companies have followed somewhat similar paths since then, though Weibo really can’t compare with Twitter’s requirement to fame as the main soapbox of the world’s most powerful leader, U.S. President Donald Trump. But to get a sense of where Weibo currently stands in the world, it’s helpful to squint at some of its metrics compared with Twitter. The latter is a far increasingly global company, but one that has moreover struggled to monetize its big user base.

The two companies have washed-up a bit of a seesaw over the last couple of years. Weibo lived in Twitter’s shadow for most of its early years. But it notched a major victory when it passed its U.S. peer in terms of users and market value in 2017 — impressive feats when one considers that Twitter was both older and far increasingly globally diverse than its Chinese little sibling.

But investors seem to be souring on Weibo these days. Pursuit a increasingly than 60% plunge in its stock over the last two years, the visitor is now worth well-nigh $10 billion, or less than half of Twitter’s latest value of well-nigh $23 billion. In terms of daily stereotype users, Weibo is still superiority with 216 million versus Twitter’s 145 million, equal to their latest reports. But many may wonder well-nigh the quality of Weibo’s users compared with Twitter’s. Weibo’s well-constructed reliance on China is moreover probably considered a big risk factor.

Both companies are now profitable, which was difficult for each to unzip as both looked for ways to monetize their large user bases. But Twitter’s revenue is still well-nigh twice as big as Weibo’s, with $824 million for the former versus $468 million for the latter in their latest quarters. That does seem to show that Twitter indeed has higher quality users that advertisers are willing to pay increasingly to reach.

Ups and downs

All that said, we’ll spend the rest of this post transiently recounting Weibo’s biggest ups and downs, and finish by looking at its latest struggle to reinvent itself with Oasis.

Following its sudden rise to prominence in 2009, Weibo enjoyed a few years in the sun as it became an important news source for many Chinese who traditionally mistrusted increasingly official media. It moreover helped that the government embraced Weibo as an constructive platform to communicate with the people.

A crowning victory during that initial success period came in 2013 when e-commerce giant Alibaba (NYSE: BABA) made a major investment in Weibo. Alibaba continues to be a major stakeholder in the visitor to this day, and provided 7% of Weibo’s revenue last year, equal to its 2018 yearly report.

But Weibo began to fall out of favor not long without the Alibaba tie-up, as alternatives began to towards in the social networking realm, most notably the wildly popular WeChat. Weibo found a new lease on life virtually three years ago by hopping on China’s video craze. But that effect has rapidly worn off in the last year as other services like Kuaishou and Douyin have grown rapidly.

That brings us to the present where Weibo is trying to once then reinvent itself with Oasis, which the visitor describes as “a platform for people to share the status of their life.” Apparently that’s a nod to the fact that current Weibo users mostly share news and their related views, similar to Twitter. Thus this new platform, which is set to launch this month pending regulatory approval, could be a increasingly Facebook-like way to share increasingly personal things.

Interestingly, a transcript from Weibo’s latest quarterly earnings undeniability shows only three analysts asked questions, quite a small number for such a high-profile company. One of those asked well-nigh Oasis, while the other two queried on a softening ad market that is hurting not only Weibo but other advertising-dependent companies.

The low reviewer interest could partly be explained by the inflowing of other Chinese internet companies reporting earnings last week, including big names like Tencent, JD.com and Huya. But it does seem like interest in the visitor is waning in the squatter of increasingly dynamic up-and-comers with far faster growth.

For the short term certainly, people seem to be skeptical well-nigh Weibo due to the competition factor and slowing ad market. It’s quite possible the visitor could reinvent itself once then with Oasis, as it did in the past with video. But that element is still quite a big question mark, expressly in the squatter of existing competition from WeChat. That ways the visitor and its stock could remain under pressure for some time to come, potentially a long time if Oasis doesn’t provide the kind of relief that Weibo is hoping for.