NEW YORK (TheStreet) -- Most American investors are aware thatSina(SINA_)andSohu(SOHU_)are among the big Web portals of China. They know that both have been around for a long time and that both sites look cluttered with information and ads compared with their American counterparts. However, there's much more to the story, especially with what's been cooking at Sina over the last 18 months.
As with any area of investing, it pays to dig beneath the surface of the common bullet points about a company to really figure out its competitive strengths and industry dynamics. The great American portals of the Internet's first wave have either been greatly diminished -- likeAOL(AOL_)orYahoo!(YHOO_)-- or have morphed into part of a broader online strategy likeMicrosoft's(MSFT_)MSN.
Arguably, the most exciting areas of the consumer Web in the last 10 years are social networking sites likeFacebookandTwitter, both of which are private. So although both have seen their private valuations balloon over the last few years an argument could be made that public investors haven't appreciated yet their full value in those of comparable companies. But there are no such comparable companies in the U.S., right? True. But look at China.
Youku, one of China's "YouTubes," will come public later this week, while one of China's "Facebooks" --Renren-- will come public in the coming weeks.
Sina, however, has managed to grow its own Twitter. It's called Weibo and it's the biggest reason for the recent ramp-up in thestock priceand why Sina is still considerably undervalued compared to where it will be in six to 12 months from now.
Most are familiar with Twitter's success story. It started in late 2006 so it's now four years old. People at first couldn't understand who would be self-indulgent enough to update the world that he just ate a ham sandwich. Few realized that for many users the Twitter stream would become a primary way of getting information -- likean old RSS fee -- as well as staying in touch with friends and on top of areas of interest.
The information on Breakout Performance reflects opinions by the authors and nothing contained in this publication should be interpreted as or deemed to be a recommendation to any investor to purchase, sell or hold any security. Any investment decisions must in all cases be made by the reader or by their investment adviser. Nothing contained here is intended as a solicitation.
The views expressed on Breakout Performance are solely those of the author or writers on this site.