Weibo set for US listing amid market gloom
Print Edition
Sina Weibo, widely known as China’s version of Twitter, is set to go public in the United States this week — after three weeks of selloffs took their toll on technology stocks.
The microblogging subsidiary of Chinese Internet giant Sina is scheduled to debut on the Nasdaq exchange tomorrow under the symbol “WB” in an initial public offering expected to raise at least US$340 million.
Sina Weibo — launched in August 2009 — is a leading social media site in a country with the world’s largest population of Internet users at 618 million.
But the estimated value of the IPO, filed by Weibo with the US Securities and Exchange Commission this month, was down on the sum of up to US$500 million indicated in March — reflecting discretion amid a gloomy market outlook after the Nasdaq index was down for more than three weeks.
The service itself is also facing questions about the size of its user base and rising competition from local rivals, such as Tencent’s mobile app WeChat.
“It’s much riskier for them to enter the market now than it was three weeks ago,” said Gregori Volokhine, a trader for Meeschaert Financial Services.
A total of 16 IPOs in Wall Street were planned for last week, the most in more than seven years, according to consulting firm Renaissance Capital. But only 10 were completed as the downturn continued, with six ending the week below their issue price due to a tech stocks selloff as the Nasdaq suffered its biggest one-day fall since 2011.
Weibo set its price per share in a range of US$17-19, relatively cheap compared with other social networking companies.
The IPO is for 20 million shares, with an option for 3 million more based on demand.
A unit of Chinese e-commerce giant Alibaba had agreed to buy 3 million shares in the listing, with an option to increase its stake to up to 30 percent of the total capital of the company, up from its current 18 percent.
Funds from Alibaba will be used to repay loans from Sina, which would still hold 56.9 percent of the capital after the IPO, down from 79.9 percent.
Weibo claimed 129.1 million monthly active users as of December and 61.4 million average daily active users.
But research by an assistant professor at the University of Hong Kong found that nine of 10 Weibo posts came from a core user group of just 10 million people, the South China Morning Post reported last week.
Despite Weibo’s popularity, its ascent has hit speed bumps due to the rise of WeChat, an instant messaging platform for mobile devices. As of December, the total number of users of microblogging services had declined 9 percent from a year earlier to 281 million, the China Internet Network Information Center said in January. Of those who reduced their use of microblogging, 37 percent switched to WeChat.
(AFP)
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