Jin Yin International published a report indicating that Weibo (09898.HK) exceeded the expectations of the bank and the market in the third quarter, with the biggest highlight being the steady advertising revenue driven by the Paris Olympics, particularly significant contributions from advertisers in the food & beverage and sports outfits sectors. However, with the conclusion of the Olympics, the company's advertising revenue may resume a downward trend.

The bank believes that a comprehensive recovery in consumer spending is the only way for Weibo to turn around its business, as over two-thirds of the company's advertisers come from consumer-related industries, making its business highly reliant on brand advertising. Before there is more clarity on the recovery timeline for Weibo, the bank conservatively predicts a 4% year-on-year decline in the company's revenue for the fourth quarter, with no growth next year.

Due to a lower base, the bank expects Weibo's fourth-quarter earnings to grow by 29% year-on-year, but on a normalized basis, next year's earnings forecast is a year-on-year decline of 7%. The bank has raised its earnings forecast for Weibo this year by 4% to reflect the better-than-expected third-quarter performance, but lowered the earnings forecasts for 2025 and 2026 by 3% and 2% respectively to account for a slowdown in the recovery of advertising spending. The bank has downgraded its rating from "Outperform" to "Neutral," and cut the target price from 93.6 yuan to 77.22 yuan.