Why Weibo Shares Plunged 15% Today

What happened

Shares of China-based social network operator Weibo (NASDAQ: WB) fell as much as 14.7% today, following the release of solid first-quarter results. The stock traded 13.3% lower near 1 p.m., EDT.

So what

Weibo's first-quarter revenue rose 76% higher year over year, landing at $350 million. Adjusted earnings nearly doubled over the same period, from $0.26 to $0.50 per diluted share. The average analyst would have settled for earnings of $0.47 per share on sales near $342 million, so Weibo exceeded expectations across the board. Looking ahead, management also set second-quarter revenue guidance slightly above the current Street consensus.

Two young Chinese women giggle over their smartphones.

Image source: Getty Images.

Now what

The microblogging giant now boasts 411 million monthly active users, a 70 million increase above the year-ago period. 93% of them accessed Weibo's social platforms through a mobile device.

In short, the growth story continues to impress here. So why the plunging stock chart? Well, Weibo entered this report on a massive tailwind. Share prices had gained a staggering 115% over the previous year and 17% just in the last two weeks. After this correction, Weibo shares trade at a frothy 55 times trailing earnings.

So don't cry for Weibo investors, some of whom simply took some profits off the table today. The paused market momentum will return.

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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool recommends Weibo. The Motley Fool has a disclosure policy.