WEIBO Corp. has more than doubled this year as steady user growth and an improved sales outlook have lured investors to the Chinese social media.

    Short-sellers are becoming increasingly convinced the stock has peaked. Bearish bets on Weibo, the Asian nation’s answer to Twitter Inc., are at the highest ever, even after the Chinese company reported earnings that beat analysts estimates and forecast a bigger-than-expected increase in third-quarter revenue.

    The U.S.-traded stock posted a 19 percent gain last week, while the number of shares borrowed for short-selling rose to a record four million.

    Bullish investors are betting that television and video partnerships the company has been forging will further boost the number of people using Weibo, which has been growing at a steady rate of about 30 percent for the past two years.

    Short sellers are wagering that a 119 percent rally this year, twice as much as the second-biggest gainer among Chinese stocks in the United States, has become excessive.

    “There is a lot of optimism regarding Weibo,” Henry Guo, an analyst at New York-based M Science LLC who has been covering Chinese American depositary receipts (ADRs) for a decade, said last week. “Investors bet that it has a potential to expand and monetize its business. The question short-sellers are asking is, ‘Can the stock rally last forever?’”

    Since it was spun off from Sina Corp. in April 2014, Weibo’s stock has rallied 151 percent. Sina’s ADRs gained 33 percent during the same period.

    Weibo, backed by Alibaba Group Holding Ltd., has been adding video content live-streaming features to its microblogging service, which helped boost the number of monthly active users to 282 million in the second quarter, chief executive officer Wang Gaofei said in the second-quarter earnings statement last week.

    The firm projected third-quarter revenue of as much as US$178 million, exceeding analysts’ estimates of US$165 million.

    The shares sell for 49 times projected earnings, above the average multiple of 42 among nine global peers, including Twitter and Facebook Inc.

    (SD-Agencies)