Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of SINA (NAS: SINA) , which operates the Twitter-like Weibo service, sank as low as 11% on Friday after the Beijing government issued new rules requiring users of Chinese microblogging services to register their real names.
So what: SINA's Weibo accounts for 66% of the entire Chinese microblogging market, estimated at 300 million registered users, so investors are naturally concerned that the new rules will slow its breakneck subscriber growth. The move is just the latest in the Chinese government's bigger plan to crack down on what it considers to be false and harmful information on the Internet, suggesting that services like SINA and Renren (NYS: RENN) face even more regulatory risks down the road.
Now what: I'd look into this pullback as a possible buying opportunity. Weibo remains unprofitable, after all, and with the stock down a whopping 65% from its 52-week highs in April, it's probably safe to say that the regulations weren't a complete shock to Mr. Market. Of course, with SINA shares now down only 4% at the time of this writing, investors seem to be catching on.
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At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of SINA. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.