Weibo corporation (WB) Stock News and Forecast: Chairman denies talk of privatization

• Weibo shares surge in premarket on report Chairman and others taking the company private.
• Reuters exclusively reports on the proposed privatization of Weibo (WB).
• Weibo shares retreat as the company says the Chairman denies any talks.

Weibo shares are taking investors on a wild ride on Tuesday as one of the few Chinese stocks to be up on Tuesday as the DIDI discussion rages elsewhere hurting Chinese names. However, Weibo shares surged on Tuesday as a Reuters exclusive report claimed that Weibo (WB) Chairman Charles Chao was in talks with a state investor to take Weibo private. Reuters cited sources close to the matter. At one stage in Tuesdays, premarket Weibo shares were up nearly 40%. At the time of writing, they are trading at $60.80 for a gain of 11%.  

Weibo (WB) is often called the Chinese Twitter and is a social media platform for sharing content. Users can create and post content and follow other users. It is focused on the Chinese market.

Weibo statistics

Weibo stock forecast

Reuters reported that the proposed privatization of Weibo (WB) was due to be complete by year-end and at a price of $90-100 a share, citing sources. This immediately put a target for investors who drove the stock to above $80 in the premarket. Chairman Charles Chao is a large stakeholder in Weibo through his New Wave holding company according to Reuters.

However, the shares quickly lost some ground as Weibo released a statement in reply to the speculation. "Weibo Corporation ("Weibo" or the "Company") (NASDAQ: WB), a leading social media in China, noted a Reuters article issued today saying the Company's chairman Charles Chao and a state investor are in talks to take the Company private.  In response to the Company's inquiry, Mr. Chao informed the Company that the above information is untrue and he has had no discussion with anyone regarding privatization of the Company."

So an analysis of this one is tricky given the huge volatility that is now prevalent in the stock. Obviously, a large opening gap has occurred on the chart and markets love to fill the gap. More time is likely needed to see how this plays out but already the almost total collapse in price from $81 to $59.71 at the time of writing suggests the issue has been resolved in favour of no deal. This still leaves a large gap to fill on the daily chart back to $54. The bears can also look to the volume profile showing little volume support until the $48-50 zone.