On Friday, Citi revised its price target for Weibo Corp (NASDAQ:WB) shares, a leading social media platform, decreasing it to $11 from the previous $13 while keeping a Neutral rating on the stock. The adjustment followed Weibo's second-quarter financial performance, which aligned with modest market expectations.
Weibo's report for the second quarter of 2024 showed revenues meeting forecasts and a slight profit exceedance. The company experienced a 3% year-over-year decrease in online advertising revenues, which equates to a 1% decline when adjusted for constant currency.
This downturn was largely due to reduced spending by international cosmetic brands, although it was somewhat mitigated by increased advertising expenditure from Alibaba (NYSE:BABA) during its 6.18 promotional events.
Despite the overall cautious advertising spending atmosphere, Weibo saw year-over-year growth in sectors such as 3C electronics, e-commerce, automotive, entertainment, and gaming.
Management emphasized that advertisers continue to find value in Weibo's platform for launching new products, signaling effective returns on investment.
Looking forward to the second half of the year, Weibo's management anticipates that the macroeconomic environment will likely continue to exhibit weak sentiment. This could be further impacted by ongoing declines in cosmetic advertising spend.
However, there is cautious optimism for a potential boost in e-commerce promotional spending in the fourth quarter, following a slight uptick in early third-quarter advertising related to the Olympics.
In light of these observations and after revising estimates, Citi has set a new price target for Weibo shares at $11, grounded on a 6x multiple of the projected 2025 earnings per share of $1.85.
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