Weibo, which had just returned to the Hong Kong Stock Exchange, was trampled by investors.
On 8 December 2021, Weibo was officially listed on the Hong Kong Stock Exchange, falling below the issue price of HK$256.2 on the first day. As of the close of trading on December 13, the returning Weibo share price was reported at HK$243.2, up 0.16% from the previous trading day, stopping the three consecutive days of decline. The market value is HK$59.169 billion, which is similar to the market value of US stock Weibo.
On the day of the listing, Sina CEO Cao Guowei released a Weibo message with the content "Weibo is home". However, in the blink of an eye, the echo of investors fleeing and stampeding was heard.
Weibo is suffering from the most violent shock in the US stock market since it was listed for 7 years, and the first half and second half of 2021 are almost the existence of "ice and fire": in the first half of the year, Weibo's stock price climbed from about $40 all the way to a maximum of $64, and since July, it has been constantly oscillating lower, as of December 10, local time, it is reported at $31.65, with a market value of $7.425 billion (about HK$579.01).
Weibo CEO Wang Gaofei seems to have foreseen a possible scene, saying on the day of the listing: "We are very confident in the development of the company and pay more attention to long-term value." ”
Judging from the stock price performance and performance of Weibo, Weibo, which returned to Hong Kong for listing, still has a lot of revenue and profit on the one hand, and on the other hand, it has gradually touched the ceiling of growth. As for finding new valuation flashpoints, it is still a "long-term" problem.
From social wonder to dominance
At the beginning of its birth, Weibo, which was defined as "a new social play", in August 2009, Sina Weibo launched an internal beta version, and by inviting celebrities and celebrities to enter the blog, shouting out the slogan of close interaction with fans, it became a hit.
From the launch of the private beta version to January 2010, Sina Weibo had more than 75 million registered users. In less than half a year, the growth rate of Sina Weibo has become another "miracle" created in the Internet era.
Because of this, a number of Internet companies at that time opened the door to Weibo's products. Since March 2010, Tencent, NetEase, and Sohu have launched their own Weibo sections. In addition to the portal, people's network, phoenix network, Tianya community, etc. have also launched their own Internet platforms. In the era of the crowd chasing the deer, the Weibo war is on the verge of breaking out.
In the prospectus for the hong Kong listing, Weibo defines itself as a social media platform for people to create, discover and disseminate content. "Microblogging has changed the way people express themselves and interact with others in the public internet space. Any user can author and publish content and attach multimedia or long-form content. Any user can follow other users and add comments when forwarded. ”
In 2012, Wang Gaofei took the helm of Weibo, which can be said to be a watershed moment for Weibo. The rise of WeChat has hit Weibo's social attributes as never before. According to a report by the China Internet Network Information Center, as of December 2013, the scale of Weibo users fell by 9% year-on-year, and the usage rate was also 9.2 percentage points lower than in 2012.
Wang Gaofei's choice is to dilute the media attributes of Weibo, strengthen the celebrity effect, and open commercialization at the same time.
Soon, Weibo reached a strategic cooperation with Alibaba. According to the financial report, Alibaba brought $49.13 million and $107 million to Sina Weibo in 2013 and 2014, accounting for 26% and 32% of Weibo's total revenue, respectively. In addition, in 2014, Weibo's commercialization path has been fixed on advertising and marketing, while other revenues (membership services and game services, etc.) account for only about 20%.
The impact of this is that Weibo has obtained a lot of revenue, while finding a huge monetization outlet for its own traffic, since Weibo successfully appeared on the stage of nasdaq in 2014, the output of one "Weibo queen" after another has also overshadowed several other Microblogs and successively withdrawn from the competition of weibo tracks.
Subsequently, as major portals have abandoned the promotion of weibo projects, there is only one "Weibo" left on this track.
Defeated the portal and touched the ceiling
After defeating the weibo of the portal, it did not take long to feel that "the high place is not cold".
According to the financial report, in 2018 and 2020, Weibo's net profit attributable to shareholders was $572 million, $495 million and $313 million, respectively, showing a downward trend. From January to September this year, Weibo's net profit rose slightly to $313 million from $284 million in the same period last year.
The decline in net profit is not unrelated to the stagnation of Weibo's revenue growth. From the following table, it is not difficult to see that from 2018 to 2019, Weibo's revenue growth rate has declined sharply, and even negative growth has occurred, and Weibo's revenue has been hovering around $17 billion.
From the perspective of specific revenue structure, the advertising and marketing revenue path determined by Weibo since its initial commercialization has almost never changed. The reporter of "Phoenix WEEKLY Finance" carefully studied Weibo's past financial reports and found that advertising and marketing revenue has almost always accounted for about 80% of Weibo's total revenue, and even reached 90% at one time. In 2020, revenue generated by Weibo advertising and marketing services accounted for 88% of total revenue, of which mobile advertising revenue accounted for about 90% of Weibo advertising and marketing revenue.
This model has become the main problem for Weibo's performance to hit the ceiling.
Internally, Weibo's revenue structure makes there a lot of "unclear and unclear" relationship between Weibo traffic and interests. Under the current hot search mechanism, Weibo still reserves the entrance to advertising resources, which means that you can "spend money to buy hot searches". In the market, the corresponding hot search operation has also formed a variety of business models. Marketing agencies can publish content through multiple accounts at the same time, creating heat and making entries rush to the hot search list.
It's hard to say how much rent-seeking space there is. On August 10, 2021, a notice issued by the Compliance Supervision Department and the Human Resources Department of Sina Group showed that Mao Taotao, former senior public relations director of the Weibo Brand Marketing Department, was suspected of taking advantage of his position to accept bribes while he was in office, seriously infringing on the group's commercial interests, and had been criminally detained by the public security organs in accordance with the law.
Another Weibo employee revealed to the media that within Weibo, public relations and procurement are the hardest hit areas of corruption, and anti-corruption announcements for all employees are not uncommon, and the level of the notified personnel is in the commissioner, manager, and director.
Externally, with the advent of the short video era, the rise of emerging platforms such as Xiaohongshu and Douyin has gradually encroached on Weibo's advertising business. The most obvious manifestation is that the number of advertisers on Weibo has dropped again and again. According to the financial report, in 2018, 2019 and 2020, the total number of Weibo advertisers was 2.9 million, 2.4 million and 1.6 million, respectively. In the first three quarters of 2021, the number of advertisers on Weibo was 800,000, down 600,000 from 1.4 million in the same period last year.
Weibo explained in its earnings report that the number of advertisers has decreased, but the average amount of advertisers has gradually increased. During the above-mentioned reporting period, the average spending of Weibo advertisers (excluding Alibaba) was $470, $593 and $825, respectively. In response to this change, Weibo said that due to the increase in customer spending on repurchases, the loss of small and medium-sized enterprises with relatively low advertising budgets was caused.
A research report released by Zhongtai International believes that due to the severe macro environment and a series of strong regulatory measures, such as the restrictions on customer advertising in some key industries, the rectification of open-screen advertising, and the supervision of entertainment and rice circle culture, it is expected that the growth rate of China's Internet advertising will continue to slow down in the future.
Huatai Securities expects that the budget growth of key advertising categories such as FMCG and e-commerce may slow down in 2022. As the low base effect subsides, Weibo's value-added service revenue growth will also slow down. In addition, Weibo's gross profit margin may decline in 2022 and 2023, mainly due to the increase in video content costs and bandwidth costs.
The decline in revenue has forced Weibo to look for a second engine of growth, in addition to advertising revenue, Weibo is also constantly exploring other areas and exploring value-added services to seek monetization opportunities.
In 2017, Cao Guowei said in an interview that in terms of specific implementation, Weibo needs to strengthen the construction of content ecology, comprehensively layout short videos, live broadcasts, and strengthen the expansion of content in vertical fields.
As of June 30, 2021, more than 10 million content creators will participate in the Weibo Video Account Program. At the same time, Weibo strengthens the effective dissemination of video content in information push and video community.
Weibo CEO Wang Gaofei said that through hot events to attract users into Weibo, and then through social relationships to increase the frequency of consumption, as well as through video numbers to enhance retention capabilities.
In fact, as early as 2013, Weibo has already seen the outlet of short videos. From investing in technology, to supporting second-shot video, opening up the cloud cut system, and launching the Aidong Small Video APP, Weibo is constantly moving closer to the track of short videos. However, due to the fact that Seconds Beat has always existed as a subsidiary tool of Weibo, it has missed the opportunity to transform into a content-based short video platform. Since then, the rise of Douyin and Kuaishou has also cast a layer of fog over Weibo's short video business.
The same is true for the live streaming business. In 2020, the revenue of Weibo live broadcasting business was US$39.3 million, down 48.76% year-on-year. As of June 30, 2021, Weibo's live streaming revenue decreased to $9.9 million from $20.9 million in the same period last year.
The problem of walking on one leg, Weibo still can't get rid of it.
Game + competition, the last Weibo can catch the outlet?
On the eve of the listing, the latest financial report given by Weibo was eye-catching, and the Q3 revenue reached 600 million US dollars, an increase of 30% year-on-year, far faster than the same period in the previous two years.
According to Weibo's latest financial report, as of September 2021, Weibo's monthly active users reached 573 million, an increase of 12.1% over the same period last year. The average DAU also reached 250 million, and the year-on-year increase also reached 10.7%. Daily active data hit an all-time high.
The direct effect of this financial report is to dispel speculation about the negative impact of cleaning up the rice circle on Weibo. Entertainment topics account for a large proportion of Weibo, and to some extent, the rice circle determines the rice bowl of Weibo.
In a conference call after Weibo's recent three-quarter report, Weibo CEO Wang Gaofei also admitted that the entertainment industry in the past year was too "head-headed".
In fact, more than the past year, the "head" of the entertainment industry is a phenomenon that has always existed in Weibo, although this has also brought a lot of income to Weibo, but with the emergence of the rice circle and the commercialization of hot search, Weibo has begun to swim on the edge of supervision. The lack of supervision has repeatedly turned Weibo into a manipulative field for public opinion and the birthplace of false news.
For the overly "entertaining" Weibo, the regulatory authorities have also repeatedly intervened. As early as 2016, Weibo was interviewed by the Cyberspace Administration of China for spreading obscene and pornographic information. Since then, from 2018 to the present, Weibo has also been repeatedly interviewed by relevant departments because of the "star power list" and APP data leakage. In addition, the love bean Krypton gold hit the list and poured milk incident also once attracted great attention from the regulator, and relevant policies were introduced for this.
Wang Gaofei also talked about the reasonable "entertainment" of Weibo in the conference call, he said that since the end of last year, Weibo began to reduce the proportion of hot search entertainment content, before the introduction of relevant management policies, entertainment content stabilized at about 25%. But in fact, entertainment is still the main direction of hot search, and celebrities buy hot search is also a common thing.
The next question is, after the proportion of "entertainment" declines, where will the exploration of Weibo turn? Judging from the current situation, it is more likely to be competition and gaming.
During the Tokyo Olympic Games, hot searches for sports competitions almost filled the entire Weibo hot search. In addition, Weibo has also expanded its sports content through the development of niche sports projects, such as women's Muay Thai, parkour, etc.
The same is true for the esports sector. In November 2021, when the Chinese e-sports team EDG cut through the thorns in the League of Legends Global Finals, Weibo brushing screens also became a natural scene.
In August 2020, Weibo acquired the TS King Glory Team and TS's QQ Flying Car branch. By this year, Weibo and the League of Legends branch of Suning Tesco E-sports Club reached a strategic cooperation.
According to Weibo's financial report, in June 2021, according to Weibo's data analysis results, more than 75% of weibo's determined monthly active users belonged to Generation Z, that is, the generation born in 1990 or later.
According to the prospectus, as of 2021, Weibo already has 46 vertical areas of content such as celebrities, celebrities and entertainment, humorous TELEVISION, media, variety shows and programs, fashion, beauty, finance and games, ensuring the scale and level of content production, and almost establishing 46 vertical and social ecosystems. As of June 30, 2021, there were 4.4 million verified accounts on Weibo, such as celebrities, celebrities, KOLs, corporate partners, and media outlets.
Betting on Gen Z also puts themselves once again in the middle of the red sea of social racing. In the layout of sports and e-sports, whether Weibo can regain its life under the Z generation still needs to be confirmed by time.
After all, investors don't always pay for stagnant products. What Weibo needs to answer more is how to make traffic, benefits, and social effects produce the best chemical reaction when the user scale dividend has peaked.