What happened in the past two years when Twitter’s stock price was halved and Weibo’s stock price doubled?

Twitter is in dire straits, while the latest financial report of China's Sina Weibo is surprisingly good. The same is true of its stock price performance in the past two years. The former has shrunk by half, while the latter has doubled. What caused such a difference? "Insights" will help you understand.

Weibo released its second quarter financial report for 2016, with impressive performance and profits increasing more than five times year-on-year.

In the history of the development of China's Internet over the past 20 years, Weibo is an outlier. Its uniqueness lies in the fact that there are few products like it that are unanimously favored by the public, then unanimously pessimistic, and then rise in the midst of pessimism.

In 2011, Weibo reached its peak amid public optimism, and there was even a saying that “Weibo changed China.”

In 2012, Weibo started to go downhill. An interesting phenomenon is that it went from "checking Weibo every day" to "who still uses Weibo now?"

In 2014, when Weibo went public, domestic public opinion was still not too optimistic about it. One important reason was that WeChat and its public account platform attracted too much attention.

In 2016, Weibo rose strongly, and by August, its stock price had been rising for six consecutive months. The current stock price hit a record high, breaking through $40.

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The rise in stock prices is due to performance. Since its listing in 2014, Weibo's performance has been satisfactory.

Weibo's total revenue and advertising revenue have increased by 40-50% year-on-year every quarter, and its profit growth can really be described as "jaw-dropping". Since the first quarter of 2015, Weibo's year-on-year profit growth has been described as multiples - of course, the small base is a very important reason. In the four quarters of 2014, three quarters were in a loss state, and it was not until the second quarter of 2015 that it officially entered the profit stage.

Alibaba acquired a stake in Weibo in April 2013 and provided three years of performance support to the latter. In the beginning, Weibo's revenue did benefit a lot from Alibaba's Taobao system, but today, Weibo's dependence on Alibaba is not high.

Weibo claims that it has 1 million advertisers on its platform. In Q3 2015, it had only half that number: 500,000. Weibo's revenue has already been fully developed.

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As a person who lives in Shanghai and often travels between Beijing, Guangzhou, Shenzhen and Hangzhou, I do hear these words quite frequently: I no longer use Weibo, and few people around me use it either.

I don’t use it much myself. I didn’t even install a Weibo client when my phone only had 16G of memory.

However, Weibo's DAU and MAU are both increasing at a year-on-year rate of about 30% per quarter.

I reflected on the reasons why I don’t use Weibo very much: this app is quite complicated. Once I spent a long time looking for my pitiful advertising share. I couldn’t help but complain: which product manager made it so complicated?

But it is entirely possible that there is another group of people who only use a few functions of Weibo and do not care about other functions. It is also possible that there is a group of people who use Weibo every time it is updated. For them, long-term use has made them feel that it is not difficult to find sub-functions.

A similar situation is that I still don’t understand the extremely complicated QQ on Windows system (it is very simple on Mac) so I rarely use QQ, but this is just my case.

There are some people who only use QQ for chatting or transferring files, and no matter how complicated it is, it has nothing to do with them. There are also some people who use QQ every time a new function is added or a new version is released, and of course they don’t feel confused like me when I suddenly pick it up.

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Teacher of Weibo: Twitter has not been doing well in the past two years.

The stock price trends are completely different.

Twitter has been in a loss-making state. Some media reported that Twitter plans to sublease 17,000 square meters of space in its San Francisco headquarters to increase revenue and reduce costs.

Compared with Weibo, which has a 30% year-on-year increase in MAU every quarter, Twitter's user activity is getting worse. In Q2 2016, its MAU year-on-year growth rate entered the negative zone.

Twitter changes CEOs so often that my friends joke that the company has already taken on a Yahoo- like temperament.

why is that?

Four

Twitter has had negative profits for a long time, and I found a small reason: its expenses are too high compared to Weibo.

This is mainly reflected in sales, management and administrative expenses. Twitter's expenses have accounted for half of its revenue for two consecutive years, while Weibo is more restrained.

This may be one of the factors affecting profits. To put it bluntly, Twitter's personnel expenses account for a relatively large proportion.

But this seems difficult to explain why Twitter's active user base has not been growing rapidly.

After adding Facebook ’s quarterly year-on-year MAU growth data, we get the following picture:

The gray line is Facebook's, and its year-on-year growth rate has been very stable, maintaining at nearly 15%. Considering that Facebook's base has reached 1.28 billion since Q1 2014 (Weibo had 143.8 million and Twitter had 255 million in the same period), this growth rate is satisfactory.

As a social application, Facebook is a huge shadow for Twitter.

There is actually one very big difference between Facebook and Twitter: Facebook is heavy and complex, while Twitter is light and simple.

It seems that being light and concise does not necessarily please users. QQ and WeChat are neither light nor concise.

Therefore, I have always been skeptical of the seemingly philosophical saying “less is more”.

If it is the early stage of the product, less is more may be a feasible entry tactic. But in the middle and late stages, at least in the social field, we have seen that quite complex one-stop integrated services have won.

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Now let’s take a look at what Weibo has done to allow it to continue to thrive in the shadow of WeChat.

There is no doubt that there are still differences between Weibo and WeChat.

Suppose an ordinary person named Zhang San becomes a fan of Fu Yuanhui because of the phrase "primordial power", but it is difficult for him to become a "friend" of Miss Fu on WeChat, and thus it is almost impossible for him to see what this "mudslide" athlete actually said in her circle of friends.

Of course, he can follow Fu Yuanhui's official account (assuming it exists). But most WeChat official accounts can only post pictures and texts once a day. From Fu Yuanhui's perspective, if she really wants to win over fans, this frequency is not enough.

In fact, WeChat Official Account is a product that spans PC and mobile terminals. Content producers need to use PC, while content acquirers are on mobile terminals. WeChat Official Account is not a purely mobile product (WeChat Official Account is testing a mobile production APP on a small scale).

We can find from observing Fu Yuanhui's past Weibo that it is difficult to fit her comments and photos into the context of WeChat official accounts. Although both seem to be a set of CMS (content publishing management system), there is a huge difference between Weibo and WeChat official accounts.

This means that even under the huge shadow of WeChat, which is now at its peak, Weibo theoretically still has room to exist and is not a dead end.

It’s nothing more than seeing how Weibo is done.

Weibo’s approach is: sinking.

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The means of sinking are divided into three paths.

The first is to penetrate into third-tier and fourth-tier cities and even fifth-tier and sixth-tier cities. This is the so-called sinking of the social attributes of users.

The second is the transformation from the big V strategy to the small and medium V strategy, which Weibo calls "vertical segmentation" because small and medium Vs are generally vertically segmented rather than public. This is the sinking of content.

The third is the decline of tone. Different from the grand tone of "Weibo changes China" in the early days, a large amount of content on Weibo now is about eating, drinking, defecating and urinating.

A good example is Ruhan, a domestic internet celebrity incubator. All of its more than 30 internet celebrities have expanded their business on Weibo instead of WeChat. The most famous internet celebrity is Zhang Dayi, who made more than 60 million yuan in sales in one night during the 2015 Singles’ Day shopping festival. She currently has more than 4 million followers on Weibo.

When you observe Zhang Dayi's Weibo, you will also have this feeling: these contents do not really fit in with the context of the WeChat official account: they are generally very short texts, and then either accompanied by several photos or a video, and finally directly directed to Taobao for shopping.

For many Weibo operators whose revenue model is electricity, the mutual blocking between WeChat and Taobao makes it difficult for them to conduct business on WeChat official accounts.

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An interesting point is that under Cao Guowei 's leadership, Sina has always had a special fondness for video projects. In 2012, one of my postgraduate students, who was also an employee of Sina at the time, mentioned to me privately that Cao was very optimistic about short videos. That same year, Sina invested in the video show 9158, which was listed in Hong Kong.

Weibo currently has two Sina video tools that can be used: Miaopai and Yizhibo. The former is generally a recording and broadcasting type, that is, it is uploaded after shooting. The latter is a live broadcast type, which can be used for real-time interaction based on video.

As Internet speeds increase and bandwidth prices fall, it is clear that video will become increasingly popular. Weibo is betting on short videos and live streaming, and the direction is right.

If WeChat public accounts have driven a large wave of content entrepreneurship, Weibo may drive internet celebrity entrepreneurship - or, according to Ruhan founder Feng Min's rejection of internet celebrities, it can be called expert entrepreneurship.

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Although Weibo has come out of its trough and written an extremely inspiring story: it still turned around despite being widely criticized, I do not mean to say that Weibo will return to its heyday to the point where Tencent felt that QQ was about to be threatened. In fact, Weibo is not a big threat to WeChat.

As a social application, Weibo is ultimately an interest graph: caring about what is happening and seeing what experts recommend to me. This is certainly a rigid need, but it is probably not as rigid as WeChat, which is used to complete interpersonal communication.

Weibo has worked hard to attract more users, but according to Morgan Stanley's estimates, Weibo's MAU in second-tier cities and third-tier cities and below is 41% and 27% of WeChat's, respectively. You can think that Weibo still has room for growth (for example, with the help of video services), but it is unlikely to surpass WeChat.

Weibo's DAU to MAU ratio has been around 45% for 2014. It is not clear what WeChat's user engagement metric is, but Facebook's is 66% (58% in Asia).

This may be related to the complexity of Weibo's product line.

As mentioned above, platform-level products in the social field need complex functions, rather than being light and concise. However, complex functions are not the same as disorder. From the perspective of product design, Weibo's various sub-functions seem complicated.

Nine

Finally, let’s talk about Weibo’s future commercialization path.

This chart shows the advertising revenue per MAU. In the first quarter of this year, Weibo reached $0.38, and in the second quarter it reached $0.45. Morgan Stanley's data for similar companies in Asia is $0.76 (first quarter). Facebook's figure in Asia is $1.5 (first quarter).

It is well known that Sina has probably the best Internet advertising sales team in China. Among all portals, the advertising sales brought by its single traffic are not inferior to Tencent QQ.com, which ranks second in China in terms of traffic.

But Weibo’s advertising sales efficiency is not high.

In the first quarter of 2016, the CPM price of Weibo was RMB 15, while the CPM price of WeChat Moments advertising reached RMB 60, and that of Toutiao was RMB 40-50.

Weibo has 1 million advertisers behind it, and its long-tail effect is indeed different from WeChat Moments ads and headline ads. Weibo’s CPM price is relatively low, which is good news for advertisers, but for Weibo, its efficiency still needs to be improved.

These figures certainly show that Weibo has not reached a point where there is no room for growth, but at the same time, they also show that Weibo’s main focus in the future will be to polish its products to increase the ratio of DAU to MAU and to improve efficiency to increase CPM prices.

This is the key indicator that should be paid attention to after Weibo releases its third and fourth quarter financial reports.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.