New Registrations For Sina Weibo Appear To Have Fallen Off A Cliff

  • Posted by
  • on February 7th, 2012

At one point in 2011 Sina ($SINA) Weibo was seeing 20 million or so new registrations per month.

Today we learned that the government will require real name registration for all Weibo users on March 16. Currently only new users need to register with real names. Chinese news reports about the March 16 deadline state that since January 1 Sina has had approximately 3 million real name registrations. If that is accurate then the monthly run rate for new Weibo registrations would appear to have dropped precipitously to 2.5 million or so.

Assuming the 3 million number is correct, I can think of at least three possible reasons for the drop:

1. Sina Weibo has tens of millions of zombie/spam accounts and under real name registration the creation of new junk accounts has ceased;

2. Sina Weibo has already reached the vast majority of potential users and so user growth will slow dramatically as the company shifts to monetizing the existing user base;

3. Potential users are turned off by real name registration and so are avoiding Weibo.

Regardless of the reasons, Sina now needs to start delivering revenue and profit in Weibo. The stock trades at less than half of its 2011 high but is up 50% in a month or so.  My understanding is that the company has been working on a Facebook-like ad targeting system. Sina is hosting an industry event in March, and investors should hope the company announces this new system and an impressive roster of advertisers.

You can follow me @Niubi on Twitter@Niubi on Stocktwits and @Billbishop on Sina Weibo.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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