When a key part of your business gets shut down…it’s probably a great time to buy. Here’s my take on Weibo (WB). (June 22, 2017)
WB
I want to talk about Weibo ( NASDAQ:WB ) today. Unless you haven’t been watching the financial news you probably already know the company got their social media stuff, their video and audio stuff, shut down by the Chinese regulators; basically because they weren’t policing the trolls like the government was wanting them to. It is kind of a tougher time to do that over here, that pesky First Amendment, but over there they could do that. I mentioned in the morning note that the stock gapped down and this could in fact be a buying opportunity or it could be a ‘hurry up run for the hills’ thing.
First of all with respect to the news and the company in China and all that, the important thing to keep in mind is, there is nobody in the company that is happy about their stuff being shut down, so they are going to do what they need to do to get it turned back on. It is kind of like Microsoft ( NASDAQ:MSFT ) with the whole WannaCry thing. Nobody was really happy about it, particularly those companies that were running bootlegged versions of Windows, which happens more than you think it does. And also those that just haven’t upgraded to the next level. It turned out to be a buying opportunity for Microsoft ( NASDAQ:MSFT ) because it took a day or two for people figure out that was actually a good thing.
Here, not exactly a good thing, but not a bad thing either; because all they have to do is change some stuff around, it is almost like flipping a light switch. What I was looking at this morning is, is this stock going to hold, still within this channel? The 50-day moving average, this key moving average as it always is, so I was looking at $70.00. When the stock stayed above $70.00, it opens up where it does first thing in the morning. And in fact I even posted in the forum, somewhere around here I said, “Weibo ( NASDAQ:WB ) isn’t your stock today guys, it is not rebounding.” Well, maybe Weibo ( NASDAQ:WB ) is member and it said, “Well, I think I will prove you wrong.” Then a little bit later in the morning the stock does start, finally, trading up above this level, and that was the time to buy the stock.
The way I look at this now is, this is a good entry. I think you are fine right here. Look at this massive volume, this was a total Tidy Bowl flush here, everything went out. So I am looking at a new cost basis for this stock right there. So you can buy this stock as confidently as you can buy any stock of a Chinese company, nothing against China but the reporting can be a little spotty out of there, lets just put it that way. So as long as this stock holds up, you keep a fairly tight stop on this position because this bad news could be just the thing that gets this stock out of it’s little doldrums here. If you look at this on the weekly chart you can see, this is in a really good position. I like this, the fundamentals for growth are really, really strong here. If you haven’t figured it out by now, I am saying, “I think you want to buy this stock”. They don’t report earnings for a couple months and that gives this plenty of time to break through 80.00, and lets just look for 90.00 or even more.
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