[Updated]Alibaba Reportedly Buys 15%-20% Stake in Sina Weibo

By Tracey Xiang on November 18, 2012

Credit:ifanr.com

Investors didn’t buy into Sina’s announcement of 400 mn registered weibo users, leaving its stock price down by 15% on the past Friday. There has been no lack of drama in its stock price in the past two years, thanks to all the hype about its Weibo. And more to come. According to James Cheng, a tech media veteran, Alibaba is investing in Sina Weibo, taking a 15%-20% stake at a valuation of USD 2-3 billion. Both companies declined to comment on it when reached out by media. Similar news was revealed by Daihui Feng, an industry insider and former employee at Alibaba, a couple of days ago.

But more calculations investors should do before acting on next Money, for the one Alibaba invests in may be the Sina Weibo as as a separate company. According to Mr. Cheng, Sina Weibo has been spun off from its parent company, as rumor went on for a while. New-Wave Investment Holding Co. Ltd., registered in 2010 and controlled by Charles Chao, is the potential one that will operate Sina Weibo.

The disappointing financial guidance doesn’t hint that Weibo will bring in big benefits for another quarter. Some advertisers doubted how ”targeted, effective” Weibo ads can be as they are CPM-based. Charles Chao pointed out on the earnings conference call last Friday, pricing based on CPC, CPE(cost per engagement) and CPF (cost per fan) was rolled out for small customers and the self-serve promoted feed system will be launched in next quarter. Sounds as good as every monetization means Chao has sold. Wenxiang Gong, an e-commerce expert, said seldom advertisers transferred from third-party marketing services to the Sina Weibo display advertising system launched a couple of months ago. One of the reasons, according to the founder of 50fit.com, Sina Weibo takes twice the commissions, 30%, than what Weibo Yi, a well-regarded third-party Weibo marketing agency, does.

The company sees more challenges from the mobile end. 72% of users ever accessed Sina Weibo through mobile, while 15%-20% of Weibo advertising revenue was from there, disclosed by Charles Chao. He also said that 50% of the traffic on its news portal came from the mobile – I heard Sina staff said it was 60-70%. He indicated future ads will be shown in the news feed and a payment system will work more closely with mobile.

Alibaba could help with the payment part if the rumor turned out to be true. Alibaba CEO Jack Ma did address the importance of SNS on various occasions. Taobao tried building up Taojianghu, a social shopping platform, but it didn’t gain much traction. It was reported that Alibaba invested in Momo, a stranger social network. If Alibaba isn’t for Sina’s uers and traffic, it could be another investment like the one in Sogou, the search service of Sohu, from where it exited earlier this year.

Update: Sectary-general of Alibaba confirmed that they were in talk with Sina on a strategic cooperation. Details haven’t been disclosed.

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