Critical Comparison: Weibo (NASDAQ:WB) vs. Grom Social Enterprises (NASDAQ:GROM)

Weibo (NASDAQ:WB) and Grom Social Enterprises (NASDAQ:GROM) are both computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, risk, earnings, profitability, analyst recommendations and valuation.

Analyst Ratings

This is a breakdown of current recommendations for Weibo and Grom Social Enterprises, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Weibo	1	3	2	0	2.17
Grom Social Enterprises	0	0	0	0	N/A

Weibo currently has a consensus target price of $11.98, indicating a potential upside of 22.00%. Given Weibo’s higher probable upside, research analysts plainly believe Weibo is more favorable than Grom Social Enterprises.

Valuation and Earnings

This table compares Weibo and Grom Social Enterprises’ top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Weibo	$1.76 billion	1.31	$342.60 million	$1.42	6.92
Grom Social Enterprises	$4.04 million	1.24	-$12.53 million	($18.80)	-0.03

Weibo has higher revenue and earnings than Grom Social Enterprises. Grom Social Enterprises is trading at a lower price-to-earnings ratio than Weibo, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Weibo has a beta of 0.4, suggesting that its share price is 60% less volatile than the S&P 500. Comparatively, Grom Social Enterprises has a beta of 1.57, suggesting that its share price is 57% more volatile than the S&P 500.

Profitability

This table compares Weibo and Grom Social Enterprises’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Weibo	19.47%	10.77%	5.11%
Grom Social Enterprises	-309.92%	-71.55%	-57.60%

Insider and Institutional Ownership

68.8% of Weibo shares are held by institutional investors. Comparatively, 15.9% of Grom Social Enterprises shares are held by institutional investors. 41.3% of Weibo shares are held by insiders. Comparatively, 0.0% of Grom Social Enterprises shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Weibo beats Grom Social Enterprises on 12 of the 13 factors compared between the two stocks.

About Weibo

Weibo Corporation, through its subsidiaries, operates as a social media platform for people to create, distribute, and discover content in the People's Republic of China. It operates in two segments, Advertising and Marketing Services; and Value-Added Services. The company offers discovery products to help users discover content on its platform; self-expression products that enable its users to express themselves on its platform; and social products to promote social interaction between users on its platform. It also provides advertising and marketing solutions, such as social display advertisements; and promoted marketing offerings, such as Fans Headline and Weibo Express promoted feeds, as well as promoted trends and search products that appear alongside user's trends discovery and search behaviors. In addition, the company offers products, such as trends, search, video/live streaming, and editing tools; content customization, copyright contents pooling, and user interaction development; and search list recommendation, trends list recommendation, and Weibo app opening advertisements. Further, it provides back-end management, traffic support, and product solutions to MCNs, unions, and e-commerce partners; open application platform for other app developers that allows users to log into third-party applications with their Weibo account for sharing third-party content on its platform; and Weibo Wallet, a product that enables platform partners to conduct interest generation activities on Weibo, such as handing out red envelops and coupons. The company was formerly known as T.CN Corporation and changed its name to Weibo Corporation in 2012. The company was founded in 2009 and is headquartered in Beijing, China. Weibo Corporation operates as a subsidiary of Sina Corporation.

About Grom Social Enterprises

Grom Social Enterprises, Inc., through its subsidiaries, operates as a media, technology, and entertainment company that focuses on delivering content in the United States. The company operates a social media network for children under the age of 13 years. It also produces animated films and televisions series; and provides web filtering services to schools and government agencies, as well as acquires, develops, and builds commercial potential of kids and family entertainment properties and associated business opportunities. Grom Social Enterprises, Inc. was founded in 2012 and is headquartered in Boca Raton, Florida.