SINA Corp (SINA) has joined up with China’s largest e-commerce platform, Alibaba, to explore new areas of monetization and expects to generate at least $380 million more in Weibo advertising revenue over the next three years, says Cynthia Meng, Managing Director at Jefferies & Company, Inc.
“We just upgraded Sina to ‘buy’ from ‘hold’ on April 29, and increased target price to U.S. $75, from U.S. $50. Sina announced a strategic alliance with China’s largest e-commerce platform Alibaba, which is paying U.S. $586 million for an 18% stake in Sina Weibo, with an option to increase its stake in Weibo up to 30% at a future date,” Meng said.
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This alliance should be a positive move for SINA, as it is expected to ramp up monetization of its Weibo site, and Meng expects immediate revenue synergies for both SINA and Alibaba.
“This alliance, in our view, is very positive and is expected to generate at least U.S. $380 million more in Weibo advertising revenue over the next three years. In addition, the two large Internet companies will jointly explore new ways to monetize from social commerce, mobile and social media,” Meng said.
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