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What: Shares of SINA have skyrocketed today by as much as 21% after Alibaba acquired an 18% stake in its Weibo subsidiary.
So what: Weibo, the "Twitter of China," and Alibaba will partner to develop monetization strategies for Weibo's user base. The two will combine Alibaba's e-commerce specialties with Weibo's social reach to deliver new marketing solutions to merchants. The companies will also share data and explore new business models.
Now what: As part of the deal, Alibaba is investing $586 million in Weibo, giving it an 18% stake, and SINA has also given Alibaba an option to boost its ownership up to 30% at a mutually agreed valuation within a certain period of time. The partnership is expected to translate into $380 million in advertising and social commerce revenues over the next three years. Combined, Weibo and Alibaba currently have hundreds of millions of users.
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The article Why SINA Shares Skyrocketed originally appeared on Fool.com.
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