Sina Volume Spikes as Company Announces Weibo Share Distribution

  • Trading volume jumps to over three times the 90-day average
  • Weibo has surged 181% since 2014 spinoff in U.S. trading

Trading volume in Sina Corp. was more than triple the three-month average after the company said it will distribute to shareholders some of the stock it owns in Weibo Corp., the Chinese social media operator that’s trading near a record high.

Weibo has jumped 181 percent since its U.S. debut. That compares with a 43 percent increase in Sina since it spun the company off in April 2014. Sina will swap one Weibo Class A ordinary share for 10 Sina shares, reducing its stake to about 51 percent from 54 percent, the company said Wednesday.

“Sina shares are not properly valuing the Weibo holding, so Sina shareholders are not getting the full value of the over-valuation of the Weibo shares,” David Riedel, president of Riedel Research Group who recommends buying Sina and selling Weibo, said by e-mail. “In that situation, Sina is right to give the shares to the shareholders and let them sell them into the market.”

Sina’s American depositary receipts rose 0.5 percent to $75.83 as of 1:42 p.m. in New York. More than 2.8 million shares changed hands, about 3.3 times the full-day average trading volume of the past three months. Weibo’s ADRs gained 0.3 percent to $47.66 on about double the average volume.

Short interest in Weibo has increased to a record 25 percent of shares outstanding from 2 percent in February, data compiled by Bloomberg and Markit Ltd. show. Bearish bets on Sina are near the lowest since 2014.

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