SINA Corp. Starts 2018 Strong (and Falls Anyway)

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You wouldn't know it by the market's knee-jerk reaction, but SINA Corp. (NASDAQ: SINA) just announced another stronger-than-expected quarter early Wednesday. Shares of the Chinese internet media company fell 10% when all was said and done today -- though it's not the first time we've seen the stock fall on positive news.

Before we get there, let's take a deeper look at what SINA accomplished over the past few months, and what investors should be watching as we look forward.

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SINA's results: The raw numbers

Metric

Q1 2018

Q1 2017

Year-Over-Year Growth

GAAP net revenue

$440.8 million

$278.1 million

58.5%

GAAP net income attributable to SINA

$28.7 million

$38.5 million

(25.5%)

GAAP net income per diluted share

$0.38

$0.52

(26.9%)

What happened this quarter?

  • Note SINA transitioned to the new ASC Topic 606 accounting standard at the start of the year. Under the old (ASC 605) standard, revenue still would have climbed 59%, but to $456.1 million.
  • On an adjusted (non- GAAP) basis -- which excludes items like stock-based compensation -- SINA's net income was $35.2 million, or $0.47 per share.
  • Both the top and bottom lines exceeded investors' expectations for adjusted earnings of $0.42 per share on revenue of $433.3 million.
  • Advertising revenue grew 61% year over year to $367.1 million, driven primarily by 79% growth in Weibo advertising sales, to $303 million, and 7% growth (or 14% under the old accounting standard) in Portal ad revenue to $64.1 million.
  • Adjusted non-advertising revenue increased 50% year over year to $71.1 million, led by growth in Weibo gaming and membership revenue, as well as SINA's fin-tech businesses despite ongoing regulatory challenges.
  • Generated cash from operations of $54.9 million.

What management had to say

SINA chairman and CEO Charles Chao stated:

Looking forward

SINA didn't offer any updates to its latest full-year guidance, which was provided in February and called for 2018 revenue growth of roughly 46% year over year at the midpoint. Though we don't pay close attention to Wall Street's demands, that's still roughly in line with consensus estimates.

All things considered, there was nothing in this report that would seem to merit today's pullback. Rather, as I noted earlier Wednesday, it likely didn't help that SINA stock was up more than 30% over the past year as of yesterday's close, or that it has a history of temporary post-earnings drops that don't always mesh with its typically strong performance. As such, I think investors would do well to remain patient and continue focusing on the long term. As SINA's business continues to outperform, its stock price should ultimately follow suit.

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Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends Sina. The Motley Fool has a disclosure policy.