By Eric Jackson, Senior Contributor
12/08/10 - 07:28 AM EST
NEW YORK (TheStreet) -- Most American investors are aware that Sina(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 -- like AOL(AOL_) or Yahoo!(YHOO_) -- or have morphed into part of a broader online strategy like Microsoft's(MSFT_) MSN.Arguably, the most exciting areas of the consumer Web in the last 10 years are social networking sites like Facebook and Twitter, 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 the stock price and 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 -- like an old RSS fee -- as well as staying in touch with friends and on top of areas of interest.
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