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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.Fool contributor Evan Niu, CFA, has no position in any stocks mentioned. The Motley Fool recommends 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.
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