Weibo Corp Debt

WB Stock  USD 9.60  0.14  1.48%   
Weibo Corp holds a debt-to-equity ratio of 0.69. At present, Weibo Corp's Net Debt is projected to increase significantly based on the last few years of reporting. The current year's Short Term Debt is expected to grow to about 850.2 M, whereas Short and Long Term Debt is forecasted to decline to about 626.9 M. With a high degree of financial leverage come high-interest payments, which usually reduce Weibo Corp's Earnings Per Share (EPS).

Asset vs Debt

Equity vs Debt

Weibo Corp's liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Weibo Corp's cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the Company is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps Weibo Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Weibo Corp's stakeholders.
For most companies, including Weibo Corp, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Weibo Corp, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Weibo Corp's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book
0.6423
Book Value
14.009
Operating Margin
0.3092
Profit Margin
0.1852
Return On Assets
0.0436
At present, Weibo Corp's Total Current Liabilities is projected to increase significantly based on the last few years of reporting. Change To Liabilities is expected to grow at the current pace this year, whereas Liabilities And Stockholders Equity is forecasted to decline to about 3.9 B.
  
Check out the analysis of Weibo Corp Fundamentals Over Time.
For information on how to trade Weibo Stock refer to our How to Trade Weibo Stock guide.

Weibo Corp Bond Ratings

Weibo Corp financial ratings play a critical role in determining how much Weibo Corp have to pay to access credit markets, i.e., the amount of interest on their issued debt. The threshold between investment-grade and speculative-grade ratings has important market implications for Weibo Corp's borrowing costs.
Piotroski F Score
6
HealthyView
Beneish M Score
(2.78)
Unlikely ManipulatorView

Weibo Corp Debt to Cash Allocation

As Weibo Corp follows its natural business cycle, the capital allocation decisions will not magically go away. Weibo Corp's decision-makers have to determine if most of the cash flows will be poured back into or reinvested in the business, reserved for other projects beyond operational needs, or paid back to stakeholders and investors.
Weibo Corp reports 2.71 B of total liabilities with total debt to equity ratio (D/E) of 0.69, which is normal for its line of buisiness. Weibo Corp has a current ratio of 2.21, indicating that it is in good position to pay out its debt commitments in time. Note however, debt could still be an excellent tool for Weibo to invest in growth at high rates of return.

Weibo Corp Common Stock Shares Outstanding Over Time

Weibo Corp Assets Financed by Debt

The debt-to-assets ratio shows the degree to which Weibo Corp uses debt to finance its assets. It includes both long-term and short-term borrowings maturing within one year. It also includes both tangible and intangible assets, such as goodwill.

Weibo Corp Debt Ratio

    
  27.0   
It appears most of the Weibo Corp's assets are financed through equity. Typically, companies with high debt-to-asset ratios are said to be highly leveraged. The higher the ratio, the greater risk will be associated with the Weibo Corp's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of Weibo Corp, which in turn will lower the firm's financial flexibility.

Weibo Corp Corporate Bonds Issued

Most Weibo bonds can be classified according to their maturity, which is the date when Weibo Corp has to pay back the principal to investors. Maturities can be short-term, medium-term, or long-term (more than ten years). Longer-term bonds usually offer higher interest rates but may entail additional risks.

Weibo Net Debt

Net Debt

126.95 Million

At present, Weibo Corp's Net Debt is projected to increase significantly based on the last few years of reporting.

Understaning Weibo Corp Use of Financial Leverage

Weibo Corp's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Weibo Corp's total debt position, including all outstanding debt obligations, and compares it with Weibo Corp's equity. Financial leverage can amplify the potential profits to Weibo Corp's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Weibo Corp is unable to cover its debt costs.
Last ReportedProjected for Next Year
Net Debt120.9 M126.9 M
Short and Long Term Debt919.2 M626.9 M
Short Term Debt809.7 M850.2 M
Short and Long Term Debt Total2.7 B2.2 B
Long Term Debt1.9 B1.8 B
Long Term Debt Total1.9 B1.3 B
Net Debt To EBITDA 0.17  0.18 
Debt To Equity 0.78  0.58 
Interest Debt Per Share 11.57  6.82 
Debt To Assets 0.36  0.27 
Long Term Debt To Capitalization 0.35  0.43 
Total Debt To Capitalization 0.44  0.34 
Debt Equity Ratio 0.78  0.58 
Debt Ratio 0.36  0.27 
Cash Flow To Debt Ratio 0.25  0.42 
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Check out the analysis of Weibo Corp Fundamentals Over Time.
For information on how to trade Weibo Stock refer to our How to Trade Weibo Stock guide.
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Is Interactive Media & Services space expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Weibo Corp. If investors know Weibo will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Weibo Corp listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth
0.265
Earnings Share
1.46
Revenue Per Share
7.354
Quarterly Revenue Growth
(0.01)
Return On Assets
0.0436
The market value of Weibo Corp is measured differently than its book value, which is the value of Weibo that is recorded on the company's balance sheet. Investors also form their own opinion of Weibo Corp's value that differs from its market value or its book value, called intrinsic value, which is Weibo Corp's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Weibo Corp's market value can be influenced by many factors that don't directly affect Weibo Corp's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Weibo Corp's value and its price as these two are different measures arrived at by different means. Investors typically determine if Weibo Corp is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Weibo Corp's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.

What is Financial Leverage?

Financial leverage is the use of borrowed money (debt) to finance the purchase of assets with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing. In most cases, the debt provider will limit how much risk it is ready to take and indicate a limit on the extent of the leverage it will allow. In the case of asset-backed lending, the financial provider uses the assets as collateral until the borrower repays the loan. In the case of a cash flow loan, the general creditworthiness of the company is used to back the loan. The concept of leverage is common in the business world. It is mostly used to boost the returns on equity capital of a company, especially when the business is unable to increase its operating efficiency and returns on total investment. Because earnings on borrowing are higher than the interest payable on debt, the company's total earnings will increase, ultimately boosting stockholders' profits.

Leverage and Capital Costs

The debt to equity ratio plays a role in the working average cost of capital (WACC). The overall interest on debt represents the break-even point that must be obtained to profitability in a given venture. Thus, WACC is essentially the average interest an organization owes on the capital it has borrowed for leverage. Let's say equity represents 60% of borrowed capital, and debt is 40%. This results in a financial leverage calculation of 40/60, or 0.6667. The organization owes 10% on all equity and 5% on all debt. That means that the weighted average cost of capital is (.4)(5) + (.6)(10) - or 8%. For every $10,000 borrowed, this organization will owe $800 in interest. Profit must be higher than 8% on the project to offset the cost of interest and justify this leverage.

Benefits of Financial Leverage

Leverage provides the following benefits for companies:
  • Leverage is an essential tool a company's management can use to make the best financing and investment decisions.
  • It provides a variety of financing sources by which the firm can achieve its target earnings.
  • Leverage is also an essential technique in investing as it helps companies set a threshold for the expansion of business operations. For example, it can be used to recommend restrictions on business expansion once the projected return on additional investment is lower than the cost of debt.
By borrowing funds, the firm incurs a debt that must be paid. But, this debt is paid in small installments over a relatively long period of time. This frees funds for more immediate use in the stock market. For example, suppose a company can afford a new factory but will be left with negligible free cash. In that case, it may be better to finance the factory and spend the cash on hand on inputs, labor, or even hold a significant portion as a reserve against unforeseen circumstances.

The Risk of Financial Leverage

The most obvious and apparent risk of leverage is that if price changes unexpectedly, the leveraged position can lead to severe losses. For example, imagine a hedge fund seeded by $50 worth of investor money. The hedge fund borrows another $50 and buys an asset worth $100, leading to a leverage ratio of 2:1. For the investor, this is neither good nor bad -- until the asset price changes. If the asset price goes up 10 percent, the investor earns $10 on $50 of capital, a net gain of 20 percent, and is very pleased with the increased gains from the leverage. However, if the asset price crashes unexpectedly, say by 30 percent, the investor loses $30 on $50 of capital, suffering a 60 percent loss. In other words, the effect of leverage is to increase the volatility of returns and increase the effects of a price change on the asset to the bottom line while increasing the chance for profit as well.