Weibo debuts on Nasdaq with 19.1-percent jump
By Paul Handley, AFP
April 19, 2014, 12:17 am TWN
NEW YORK--Sina Weibo, China's answer to Twitter, debuted on the Nasdaq exchange Thursday with a 19.1 percent jump despite an IPO that went out undersubscribed and lower priced than hoped.
In a spate of buying that suggested that Wall Street's waters are still welcoming to loss-making technology high flyers, and to Chinese firms as well, Weibo shares rose from the subscription price of US$17 to as high as US$24.28, before settling the day at US$20.24.
That is good news for Alibaba, the immensely profitable Chinese online commercial gateway that is preparing its initial public offering for the U.S. market later this year.
Weibo sought to raise US$380 million by selling 20 million shares for as much as US$19 each.
But underwriters could only find demand for 16.8 million shares at the low end of the offer, US$17, bringing the company US$287 million.
Charles Chao, the chief executive of Chinese online power Sina Corp, Weibo's parent, shrugged off the undersubscription, saying it was mainly important to achieve the listing and establish Weibo's separate identity.
“It's a tough market... The entire IPO market is rather soft,” he told AFP in an interview.
“To have a successful listing for us is probably the most important. We do not actually care too much about the temporary price for the stock,” he said.
“If we can over the longer term keep executing our strategies and innovating in a very focused way, we can create shareholder value.”
Weibo, launched in August 2009, is China's largest social media service with 144 million active monthly users. It is most often compared to Twitter.
But by allowing more content and functionality, it overlaps with Facebook as well. Twitter and Facebook are banned in China.
Weibo has yet to make a profit, losing US$38 million last year on revenues of US$188 million, and another US$47 million in the first quarter of this year, though revenues jumped to nearly US$68 million for the three months.
Chao said Weibo is rapidly building income from display and performance-based ads.
“We are making great progress in both advertising areas, serving different clients bases from brand advertisers to SMEs (small and medium-sized firms) to e-commerce merchants,” he said.
“There is no question that (Weibo's) revenue growth is much higher than our existing portal business.”
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