Weibo (NASDAQ:WB) recently reported earnings for its second quarter. Adjusted earnings per share came in at $0.46, which beat analysts’ consensus estimate of $0.43 per WB share. In the past nine quarters, the company has beaten estimates nine times.
Don't Miss Our Christmas Offers:
- Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
However, sales decreased 21.6% year-over-year, with revenue hitting $450.2 million compared to $574.5 million, higher than the $449.1 million that analysts were looking for. This can be attributed to a decrease in advertising demand as a result of macroeconomic headwinds and COVID-19 restrictions.
In addition, gross profits decreased by 26.4%, which means that the company demonstrated operating deleverage since it decreased more than revenue. Indeed, the gross margin contracted from 83.9% to 78.8%. Therefore, the company’s operating income decreased from $193.2 million in the comparable period to $93.9 million now.
Investor Sentiment for WB Stock is Currently Neutral
The sentiment among TipRanks investors is currently neutral. Out of the 559,870 portfolios tracked by TipRanks, less than 0.1% hold WB stock. In addition, the average portfolio weighting allocated towards WB among those who do have a position is 2.86%. This suggests that investors of the company are somewhat confident about its future.
However, in the last 30 days, 1.8% of those holding the stock increased their positions. As a result, WB stock’s sentiment is slightly above the sector average, as demonstrated in the following image:
Is WB a Good Stock to Buy?
WB has a Moderate Buy consensus rating based on three Buys, two Holds, and one Sell assigned in the past three months. The average WB stock price target of $31.62 implies 62.5% upside potential.
Takeaway – WB Stock Beat Expectations, but Headwinds Remain
Although Weibo beat analyst expectations, its performance was hindered by macroeconomic headwinds. Given that the Chinese economy is likely going to continue slowing down, along with the rest of the world, Weibo may continue seeing a few more difficult quarters going forward.
