Why Weibo Stock Popped by Over 11% Today

Key Points

• The durable Chinese social media site topped expectations for its second quarter.

• It made sure to mention that artificial intelligence (AI) technology was helping to boost its performance.

• 10 stocks we like better than Weibo ›

One of China's largest and most important social media companies, Weibo (NASDAQ: WB), was a real hit with American investors on Thursday. The company's American Depositary Shares (ADSes) closed that trading session almost 11% higher in price, thanks to a very well-received quarterly earnings report. This made Weibo quite the outlier, as the S&P 500 (SNPINDEX: ^GSPC) essentially traded flat that day.

Grateful for a double beat

Reporting in U.S. dollars, Weibo said its second-quarter net revenue was just under $445 million, for a 2% year-over-year increase. Much of this derived from that classic social media revenue stream, advertising and marketing -- this also rose 2%, to slightly over $383 million. Value-added services went in the opposite direction, sinking by 2% to $61 million and change.

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Image source: Getty Images.

In terms of operating metrics, Weibo's average daily active users figure was 261 million in June. The monthly active user (MAU) number was 588 million. Both were up, if not spectacularly, from the respective 256 million and 583 million in the same month of 2024.

On the bottom line, non-GAAP (generally accepted accounting principles) adjusted net income rose more compellingly. It totaled slightly over $143 million ($0.54 per ADS) for a 13% improvement over the year-ago quarter.

Both headline figures were comfortably above the average analyst estimates, a major reason for the double-digit share price bounce on Thursday. Those pundits were collectively modeling less than $440 million on the top line, and $0.43 per ADS for adjusted net income.

Artificial intelligence boosts real growth

Investors also surely liked what they heard about Weibo's continuing dive into artificial intelligence (AI)-enhanced offerings. The company quoted CEO Gaofei Wang as saying that "our user community of AI-powered intelligent search grew robustly, which further drove the increase of the overall search needs of users."

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.