What is a Weibo?
Sina Weibo is a Chinese microblogging website and one of the most popular social media websites in China. Sina Corp. spun off Weibo in 2014 but retains a 46% stake in the company. Alibaba (another EMQQ holding) is Weibo’s second largest shareholder with a 32% stake in the company. Weibo is the Chinese word for microblog. What Is Weibo? Weibo is often called the "Chinese Twitter", but it actually blends aspects of Twitter's tweets, Facebook's core social network, and Reddit's forum-based conversations in a jack of all trades ecosystem. Based on an open platform architecture, Weibo allows users to create and post feeds and attach multi-media content, as well as access a wide range of organically and third-party developed applications, such as online games. Weibo is the preferred communication tool for Chinese celebrities, who lure millions of followers to its ecosystem. Research shows that there are quite some differences between how Weibo is used in China and Twitter is used in other countries. Not only do users of Sina Weibo publish more posts than those on Twitter, they also tend to disclose more personal information about themselves. They are more active in reacting on other people and sharing their views, according to What’s On Weibo. The idea that Weibo is used in a more ‘personal’ way is supported by the fact that Sina Weibo users publish 19% more posts during the weekends versus Twitter, where people post 11% less tweets on weekends than they do on weekdays. Bigger Than Twitter According to the Weibo’s first quarter results, the company has 340 million active monthly users, a 30% increase from the previous year. About 154 million people use the site daily, 91% of whom access it via mobile. By comparison, Twitter, which is blocked in China, has around 328 million active monthly users, according to a BBC News article. Sina Weibo is the most popular of China's micro-blogging services, and it is the preferred platform for most mainland Chinese newspapers and TV stations, which have millions of followers. Last year, seeing how popular live streaming video was becoming, Sina Weibo launched its own live streaming app, Yizhibo, nicknamed "Yi". Yizhibo was launched in May 2016. Within 2 months there were more than 300 Chinese celebrities with registered Yizhibo accounts interacting with fans. Weibo Stays Competitive Sina Weibo has remained competitive through a number of strategic partnerships that have given host to an array of new functions. For example, in 2014, e-commerce giant Alibaba helped boost the platform's e-commerce capabilities with the introduction of "Weibo Payment", enabling users to shop online using the service. Richer Content Weibo has evolved into a multimedia blogging platform with features that combine Twitter, Pinterest and Tumblr. It is also its 140-character limit and offers users the ability to share more images and video. In a way that is similar to YouTube, Weibo works with hundreds of partners creating video content around areas including education, food, sport and entertainment. It is also the preferred partner of major TV networks such as state broadcaster CCTV, creating short-form versions of its hugely popular Spring Festival gala. Both the NFL and NBA have opened accounts on Weibo to capitalize on interest from Chinese sports fans. There’s the interactive, fun side of Weibo. Famous Weibo bloggers are often invited to broadcast clips through the app, which also allows viewers to purchase virtual gifts such as flowers and Ferraris for their favorite stars. According to the company, one fashion blogger received almost 8 million yuan ($1.2 million) in digital gifts during Weibo live streaming shows last year. The result is that, in March 2017, total video views increased more than fivefold from a year ago, according to Nomura Securities analysts. Video advertising now represents close to 20% of Weibo’s total ad revenue, according to the company. Revamped Feed Weibo is also conscious of the need to retain users, with the development of algorithms at the core of this. By analyzing factors such as a user’s click history, Weibo can push content it feels is more relevant to that individual – which keeps users engaged and inside the app for longer. Less Competition Another reason contributing to Weibo’s rise is censorship – or China’s so-called “Great Firewall.” Aside from Twitter, the country’s censors have also blocked the likes of Youtube and Instagram, freeing Weibo from the kind of competition Twitter is grappling with globally. But it doesn’t mean the company has no competition at all. Tencent’s instant-messaging app WeChat is an ever-present threat to its user base, as increasing numbers of people spend more time reading news and watching videos there. Weibo’s answer has been to create more content partnerships with third parties and introduce more live streaming. It also attracts more users by partnering with popular smartphone brands including OPPO and Vivo, which pre-installs the Weibo app on their phones. The strategy allows the company to reach more young users in China’s lower-tier cities, where consumers have embraced the cheaper Chinese handsets. Now, more than half of Weibo’s active users live in third- and fourth- tier cities such as Luo Yang and Yin Chuan, according to China’s Everbright Securities. What’s more, Weibo stands out from WeChat by allowing users to follow and interact with celebrity accounts. “WeChat is more like a personal tool,” 86 Research’s Zhang says. “Weibo, however, is China’s leading open social media platform.” Strong Results According to Weibo’s earnings announcement, net revenues in 2016 increased 37% year over year to $655.8 million. Advertising and marketing revenue increased 42% year over year to $571.0 million. Net income attributable to Weibo increased 211% year over year to $108.0 million. During the third quarter of 2017, net revenues totaled $320.0 million, an increase of 81% year-over-year, exceeding the Company's guidance between $290 million and $300 million. Advertising and marketing revenues were $276.8 million, an increase of 77% year-over-year. Net income attributable to Weibo was $101.1 million, an increase of 215% year-over-year. Monthly active users ("MAUs") had a net addition of approximately 79 million users year over year and reached 376 million in September 2017. Mobile MAUs represented 92% of MAUs. Average daily active users ("DAUs") had a net addition of approximately 33 million users year over year and reached 165 million in September 2017. And it’s a company with plenty of space to grow. Currently, it accounts for just 2% of China’s $42 billion online advertising market. As advertisers pay more for video ads, its revenue potential looks strong, said M Science analyst Henry Guo. Summary In summary, Weibo is a leading social media platform for people to create, distribute and discover Chinese-language content. Weibo stands to benefit from its leading position in China’s large and growing Internet market. The company has the content that appeals to its customers and continues to develop and evolve its product to keep pace with the market. The company’s user base continues to grow and it has been profitable. An investment in EMQQ provides exposure to Weibo through direct investment in Weibo and through Sina, which holds 46% of Weibo. EMQQ Top Ten Holdings (as of 4/03/2018) COMPANY NAME % of Net Assets TENCENT HOLDINGS LTD 7.73% ALIBABA GROUP HOLDING-SP 7.02% NASPERS LTD-N SHS 6.00% BAIDU INC - SPON ADR 5.69% JD.COM INC-ADR 5.43% MERCADOLIBRE INC 5.32% YANDEX NV - A 5.04% NAVER CORP 4.80% NETEASE INC-ADR 4.70% CTRIP .COM INTERNATIONAL-A 4.22% About EMQQ EMQQ invests in companies with exposure to the ecommerce and Internet sectors in emerging markets. Purchasing EMQQ provides exposure to companies that are positioned to benefit as emerging economies mature, the consumer class expands, and their populations increases their utilization of the Internet and ECommerce.