Aug. 16 (Bloomberg) -- Sina Corp. surged to the highest level in two months after saying it expects sales from Weibo, the Twitter-like site it operates in China, to rise in the second half as the number of advertisers jumps.
The company’s shares jumped 10 percent to $56.19 in New York, the highest price since June 19. They earlier rose as much as 14 percent. Bank of America Corp. boosted its recommendation on the shares to buy from neutral.
Weibo had about 80 advertising customers in the second-quarter and the number will “probably double” by the end of the year, Chief Executive Officer Charles Chao said in a conference call today. Weibo contributed about 10 percent of revenue in the second quarter, he said.
Sina “managed to post a small operating profit in the second quarter despite its heavy investment in Weibo, two quarters ahead of our expectations,” Eddie Leung, an analyst at Bank of America Corp. in Hong Kong, wrote in an e-mailed note today, lifting the price target to $63 from $55. Weibo posted “solid user growth” and “monetization started,” he said.
The operator of China’s most-popular microblogging site had a total 368 million registered accounts for Weibo at the end of June, up 13.6 percent from three months ago, Chao said on the conference call.
The company also plans to introduce a new version of the Weibo service by the end of the current quarter. Sina started selling advertising in April on Weibo, while the country’s economic slowdown weakened growth in ad sales on its online portal.
Advertising revenue in the third-quarter may rise as much as 21 percent to $122 million, the company said in a statement yesterday. The growth represents an acceleration and was helped by Olympics-related promotions by clients, Chao said.
Net income tripled to $33.2 million in the second quarter from $10 million a year earlier, Shanghai-based Sina said. The company was expected to post a loss of $3.9 million, according to the average of 11 analysts surveyed by Bloomberg. Profit included a $45.3 million gain from Sina’s investment in China Real Estate Information Corp., it said.
Credit Suisse Group AG increased its price estimate for Sina’s stock to $78 from $71.