Critical Survey: Netflix (NFLX) versus Weibo (WB)

Netflix (NASDAQ: NFLX) and Weibo (NASDAQ:WB) are both large-cap consumer discretionary companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, risk, valuation, institutional ownership, earnings and profitability.

Earnings and Valuation

This table compares Netflix and Weibo’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Netflix $11.69 billion 10.34 $558.92 million $1.25 222.82
Weibo $1.15 billion 25.92 $352.59 million $1.55 86.93

Netflix has higher revenue and earnings than Weibo. Weibo is trading at a lower price-to-earnings ratio than Netflix, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings for Netflix and Weibo, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Netflix 3 14 32 0 2.59
Weibo 0 0 8 0 3.00

Netflix currently has a consensus price target of $238.32, suggesting a potential downside of 14.43%. Weibo has a consensus price target of $118.50, suggesting a potential downside of 12.05%. Given Weibo’s stronger consensus rating and higher probable upside, analysts plainly believe Weibo is more favorable than Netflix.

Risk and Volatility

Netflix has a beta of 1.04, meaning that its stock price is 4% more volatile than the S&P 500. Comparatively, Weibo has a beta of 2.63, meaning that its stock price is 163% more volatile than the S&P 500.

Insider & Institutional Ownership

82.2% of Netflix shares are held by institutional investors. Comparatively, 22.7% of Weibo shares are held by institutional investors. 4.9% of Netflix shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Netflix and Weibo’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Netflix 4.78% 17.20% 3.34%
Weibo 30.66% 35.57% 21.46%

Summary

Weibo beats Netflix on 8 of the 14 factors compared between the two stocks.

Netflix Company Profile

Netflix, Inc. is a provider an Internet television network. The Company operates through three segments: Domestic streaming, International streaming and Domestic DVD. The Domestic streaming segment includes services that streams content to its members in the United States. The International streaming segment includes services that streams content to its members outside the United States. The Domestic DVD segment includes services, such as digital optical disc (DVD)-by-mail. The Company’s members can watch original series, documentaries, feature films, as well as television shows and movies directly on their Internet-connected screen, televisions, computers and mobile devices. It offers its streaming services both domestically and internationally. In the United States, its members can receive DVDs delivered to their homes. The Company had members streaming in over 190 countries, as of December 31, 2016.

Weibo Company Profile

Weibo Corporation is a social media platform for people to create, distribute and discover Chinese-language content. The Company provides ways for people and organizations to publicly express themselves in real time, interact with others on a global platform and stay connected with the world. It operates in two segments: advertising and marketing services and other services. It offers self-expression products that enable its users to express themselves on its platform; social products to promote social interaction between users on its platform; discovery products to help users discover content on its platform, and notifications to notify users on Weibo account activities through short message service (SMS) or push notification on their device. It offers advertising and marketing solutions to enable its customers to promote their brands and conduct marketing activities. It offers its platform partners with tools and application programming interfaces (APIs).

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