You know things are getting bad when the short sellers seizing on the the confidence crisis for US-listed China stocks themselves come under attack, which was the case with a recent rumor that short seller Muddy Waters was preparing an assault on leading web portal Sina (Nasdaq: SINA). (Chinese article) The rumors have certainly taken their toll, with Sina shares losing more than a third of their value in the last 3 weeks, even as Muddy Waters — in a rare case where it commented on its activities — denied it was preparing such an attack. In a way, this looks a bit like the perfect storm of factors working against Sina. In early November the company reported third-quarter results that were quite disappointing, including massive write-downs for its e-commerce and real estate initiatives that revealed its attempts to diversify beyond its core portal business were largely flopping. (previous post) Later in the month, Muddy Waters itself launched another very real attack on Focus Media (Nasdaq: FMCN), questioning some of the company’s claims about its reach, causing Focus shares to plummet despite vigorous denials by the company. (previous post) Making the entire situation worse, some of Sina’s rivals, which I will decline to name specifically, happily helped to spread the rumors about an imminent Muddy Waters attack, pointing out on an almost daily basis how Sina’s stock was sinking fast and reaching new lows. Of course, all this comes against the backdrop of a broader confidence crisis for US-listed China stocks, which began with a short seller report earlier in the year calling into question the accounting of Longtop Financial, which ultimately resulted in the de-listing of a company that formerly had a market cap in the billions of dollars. At the end of all this, Sina’s shares have now lost more than half of their value from their highs back in April and May, when the company was riding high on hopes for its incredibly popular Weibo microblogging service. If you’re a big believer in Weibo, now might be the perfect time to buy into Sina, as I doubt its stock can sink too much lower in this perfect storm of bad news.
Bottom line: A weak earnings report and rumors of a short seller attack have beaten down Sina shares, which are unlikely to sink much lower in this perfect storm of negative news.
Related postings 相关文章:
◙ Sina Results: Not So Diversified After All 新浪仍依赖广告,突围遇阻
◙ Short Sellers Target China in Year End Assault 做空抛盘年底将矛头对准在美上市中国企业
◙ Sina’s Weibo: Growth Engine or Growing Burden? 新浪微博：动力or负担？
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