Sina Bounces Back

 | Nov 30, 2011 | 9:45 AM EST
  • Comment
  • Print Print
  • Print
Stock quotes in this article:








After the strange trading in Sina (SINA) Monday, its shares bounced back big time on Tuesday.

The trouble started when rumors swirled on the Internet that the Chinese edition of The Wall Street Journal had published a story saying that Carson Block of Muddy Waters Research was preparing a short report focused on Sina. The problem was that the Journal article linked to a column I wrote last week, and I said nothing of the sort.

I heard two reports that a couple of brokerage firms were pushing this rumor hard Monday morning hoping that it would tank Sina's shares. It worked. Although Sina opened 4% higher Monday to $68, it quickly went into a free-fall, eventually hitting $55.

Even though I clarified that I had written the column, which simply pointed out that Muddy Waters was going after a much bigger target in Focus Media (FMCN) compared to the reverse mergers Block has gone after in the past, Sina's U.S.-traded shares stayed depressed, closing below $60.

After a good night's sleep, the market seems to have accepted the fact that Muddy Waters wasn't going after Sina. Muddy Waters actually tweeted that confirmation Monday. After Tuesday's price gains, adding 5% to close at $62.70, Sina is almost back to Friday's closing price of $63.15.

So is it all clear for Sina longs? No, there are still risks.

To reiterate, I think there's zero chance that Block does anything with Sina in the near-term. But the overhanging risk is what happens with the allegations of accounting tricks against Focus Media, and what did Sina CEO Charles Chao know and when? Chao has been on the Focus Media board since 2005.

There have never been any accusations of accounting problems at Sina; however, there were complaints about management doing a share sale earlier this year and for overpaying for its stakes in Mecox Lane (MCOX) and Tudou (TUDO). They also issued options for the Twitter-like Weibo entity.

Earlier this year, at the time of the Sina management share sale, CLSA analyst Jialong Shi called it a "red flag." (You can read what reported at the time about CLSA's concerns here.)

The bottom line is that Sina is likely to be dogged by criticism and questions for as long as Focus Media is in the public eye fighting Muddy Waters.

Columnist Conversations

As far as TSLA is concerned, I still have a higher target above the market at the 409 area.  I stated in ...
The TLT setup discussed in my last commentary is a bust. Key support was violated and it violated the recent l...
BBY is getting smoked this mornings(weak forecast).  The stock is off 8% after opening the session with a...



News Breaks

Powered by


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.