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What: Shares of Chinese Internet portal SINA climbed 10% today on reports that China's largest e-commerce company Alibaba Group plans to buy a stake in its Twitter-like Weibo service.
So what: According to China Business News, Alibaba is considering a 15%-20% stake in SINA Weibo, valuing the microblogging service at roughly $3 billion. Although SINA's core advertising revenues continue to be weighed down by the weak economy, the reported interest from Alibaba reinforces investor optimism over Weibo's explosive growth potential.
Now what: While neither company has yet to confirm the talks, a deal seems beneficial to both sides. Specifically, Alibaba's stake in Weibo could drive significant traffic to its e-commerce sites and SINA could benefit from a much-needed increase in advertising revenue. While investors should never buy into stock based purely on buzz, SINA is certainly worth a closer look given today's news.
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The article Why SINA Shares Surged originally appeared on Fool.com.
Fool contributor Brian Pacampara has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend 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 Motley Fool has a disclosure policy.