10 Worst Communication Services Stocks to Buy According to Short Sellers

2) Weibo Corporation (NASDAQ:WB)

Short % of Float (15 August 2024): 21.21%

Number of Hedge Fund Holders: 15

Weibo Corporation (NASDAQ:WB) operates as a social media platform for people to create, distribute, and discover Chinese language content. It provides public self-expression in real-time with a powerful platform for social interaction, and content aggregation and distribution.

As of 15^th August 2024, Weibo Corporation (NASDAQ:WB)’s short percentage of float stood at ~21.21%. Most of the short sellers continue to bet against this stock as they anticipate near-term macro weakness and elevated competition over the long run. This competition is expected to further intensify as and when mobile Internet user growth matures in China. The rise of short-form video might weigh over its user growth and user engagement moving forward. As a result, some platforms can attract content creators away from Weibo Corporation (NASDAQ:WB).

There are expectations that this competition is expected to grow, which will prompt the company to invest heavily in product development, sales, and marketing. This might impact its near-term earnings and margin growth. In 2Q 2024, its net revenues came in at US$437.9 million, reflecting a fall of 1% YoY, with advertising and marketing revenues declining 3% YoY to US$375.3 million. This fall was because of a challenging macroeconomic environment.

While short sellers continue to be bearish about Weibo Corporation (NASDAQ:WB), Wall Street analysts believe that the stock trades at lower valuations and is well-placed to take off. The company’s stock trades at ~3.46x its forward earnings, which is at a discount to the sectoral average of ~5.56x. These analysts believe that short-term challenges are expected to be offset by its strong network effect, which should act as a critical growth enabler. The company creates high levels of interactions between users, which should support brands and allow them to have a better understanding of the market’s needs.

Additionally, the company continues to invest in AI technology to enhance content production and commercialization. This should support it in improving monetization competitiveness over the long term. Its AI technology, AIGC, has been approved by the government. Therefore, this should enhance content production and commercialization efficiency.

The average price target on the shares of Weibo Corporation (NASDAQ:WB) is $11.42. It has a high forecast of $17.00 and a low forecast of $8.50. At the end of Q2 2024, 15 hedge funds owned stakes in the company.