An Extra Options Trade 
Weibo Corp (ADR) (NASDAQ:WB)Calls
Monday, August 07, 2017

** OPTION TRADE: Buy the WB Sept 15 2017 80.000 Call at approximately $4.80. Place a pre-determined sell at $10.00.

Note: No protective stop losses added -- but if you wish to do so make it $1.90.

Also Note: This is a recommendation and individual members can use their own discretion as to when to enter or exit!

You may also wish to read Stock Options Made Easy Trading Philosophy

by Ian Harvey   

An Extra Options Trade - Weibo Corp (ADR) (NASDAQ:WB)Calls

Monday, August 07, 2017

Add the following options trade that appeared in the article “Earnings Predictions for the Week Beginning August 07, 2017.”

This trade will be included in the results.

Wednesday, August 09

Weibo Corp (ADR) (NASDAQ:WB) - Wall Street analysts expect $0.31 earnings per share, up $0.19 or 158.33 % from last year’s $0.12 same quarter earnings. This translates into $67.76M profit for WB giving the stock a 63.35 P/E.

Numbers are strong and WB stock should easily bust through the high of $82 in the near term and keep that pace going for some time to come.

Option trade to consider: Buy the WB Sept 15 2017 80.000 Call at approximately $4.80.

                  --------------------------------------------------------------

The Trade Information

Weibo Corp (ADR) (NASDAQ:WB), a social media platform for people to create, distribute and discover Chinese-language content, is expected to report earnings on Wednesday, August 9, before the market opens. The report will be for the fiscal Quarter ending Jun 2017. Analysts' forecast that the consensus EPS forecast for the quarter is $0.31. They anticipate $0.19 EPS change or 158.33% from last quarter’s $0.12 EPS. WB’s profit would be $67.77M giving it 63.52 P/E if the $0.31 EPS is correct. After having $0.21 EPS previously, Weibo Corp (ADR)’s analysts see 47.62% EPS growth.

Weibo Corp has risen 239.00% since August 7, 2016 and is up-trending. It has outperformed the S&P500 by 222.30%.

WB operates as a spinoff of Chinese online media company SINA Corp (NASDAQ: SINA). Chinese e-commerce giant Alibaba Group Holding Ltd (NYSE: BABA) holds a 32% ownership stake in Weibo.

This type of arrangement isn't unusual in the Chinese marketplace where firms with different strengths look to leverage what they do with other companies that can complement their focus.

Given the concentration of the market, it has been a very successful approach so far.

Weibo Corporation has a 1-year low of $34.08 and a 1-year high of $82.28. The firm has a market capitalization of $16.33 billion, a P/E ratio of 119.71 and a beta of 2.66.

Influencing Factors

Weibo is counting on video streaming among users and its own push into featured video content, including variety shows and sports broadcasts, to fuel the next leg of its growth story. However, this plan recently encountered an unexpected roadblock. In June, the Chinese government demanded a shutdown of Weibo's video and audio streaming features on the grounds that the company didn't have the proper license for the feature and because it needed to implement more restrictive guidelines and moderation for political content.

While this presents a significant threat to the company's growth trajectory, it appears likely that Weibo will be able to reinstate streaming features after it files for the necessary license -- as Alibaba was able to resolve a similar situation by acquiring government certification. Advertising has been, and will likely remain, the major source of Weibo's revenues, and with Chinese ad spending migrating to streaming video content, it's crucial that the company quickly reenter the space.

But in the past month, WB stock is up 7%.

Also remember that those investors now on the short side are helping drive the shares higher as they ditch their positions as Weibo stock rallies. It's what they call a short squeeze. Investors on the short side see the stock rise and decide that they're losing too much and get out, which helps push the stock higher, which forces more shorts out. Rise and repeat.

But beyond this short-term trading dynamic, the fact is government censorship efforts are not new to Chinese social media companies. And given that the authorities didn't lay a finger on WB's entertainment, celebrity news, sports and fashion feeds, this isn't such a terrible threat. Most people in China know that the government is a bit touchy when it comes to open political criticism and so most people don't air their grievances online, knowing the government is watching.

As this channel wasn't a big part of WB's core growth, whatever happens won't have much of an effect on its core business, or its growth.

Analysts and Hedge Funds Opinions

Jefferies Group LLC reissued a “buy” rating and set an $82.00 price objective on shares of Weibo Corporation in a research report on Thursday, July 27th.

Several other analysts have also recently commented on the company…..

  • TheStreet raised Weibo Corporation from a “c” rating to a “b-” rating in a research report on Monday, April 17th.
  • Barclays PLC reissued an “overweight” rating and set an $85.00 price objective (up from $66.00) on shares of Weibo Corporation in a research report on Wednesday, May 17th.
  • Zacks Investment Research downgraded Weibo Corporation from a “buy” rating to a “hold” rating in a research report on Wednesday, May 3rd.
  • Finally, T.H. Capital reissued a “buy” rating and set a $70.00 price objective (up from $60.00) on shares of Weibo Corporation in a research report on Tuesday, May 9th.

Two equities research analysts have rated the stock with a hold rating, nine have given a buy rating and one has assigned a strong buy rating to the company. Weibo Corporation presently has a consensus rating of “Buy” and an average target price of $84.00.

Several institutional investors have recently made changes to their positions in the stock…..

  • Parametrica Management Ltd purchased a new stake in Weibo Corporation during the second quarter. The fund purchased 11,985 shares of the information services provider’s stock, valued at approximately $797,000.
  • State Street Corp raised its position in Weibo Corporation by 522.5% in the fourth quarter. State Street Corp now owns 449,048 shares of the information services provider’s stock valued at $18,232,000 after buying an additional 376,908 shares in the last quarter.
  • BNP Paribas Arbitrage SA raised its position in Weibo Corporation by 965.3% in the first quarter. BNP Paribas Arbitrage SA now owns 87,734 shares of the information services provider’s stock valued at $4,578,000 after buying an additional 79,498 shares in the last quarter.
  • Quantitative Investment Management LLC bought a new position in Weibo Corporation during the first quarter valued at approximately $2,243,000.

Harvey’s Options Volatility Indicator

Weibo Corporation stock should easily bust through the high of $82 in the near term and keep that pace going for some time to come.

Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

 

** OPTION TRADE: Buy the WB Sept 15 2017 80.000 Call at approximately $4.80. Place a pre-determined sell at $10.00.

Note: No protective stop losses added -- but if you wish to do so make it $1.90.

 

”Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!

Options traders are not successful because they win.

Options traders win because they are successful.



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