More on WB's first day--
Weibo IPO Stock Rises Despite Reduced Expectations
By BRIAN DEAGON, INVESTOR'S BUSINESS DAILY
Posted 04/17/2014 06:39 PM ET
news.investors.com
Weibo wobbled in its stock market debut Thursday, but it didn't fall.
China's largest microblogging service rose 19% to 20.24, but only after slipping at first, pricing at the low end of its range and selling fewer shares than expected.
The IPO of the company, referred to as China's Twitter (TWTR), priced at 17 late Wednesday, at the low end of its expected 17-19 range. It opened at 16.27, though it quickly reversed to positive territory.
Weibo (WB) was spun off by Chinese Web portal Sina (SINA), which reduced its stake in the company to 56% from 78%, though it retained about 80% of voting power. Weibo's second-largest shareholder is Alibaba Group.
A year ago, the China e-commerce leader invested some $585.8 million in Weibo for an 18% stake. With the IPO, Alibaba now holds 32% of shares. Alibaba is expected to file for its own U.S. IPO as early as Monday.
Rather than indicating troubles at Weibo, the lowered offering and IPO price were more a reflection of an IPO market that, after a red-hot first quarter, began to weaken last week, says Matthew Turlip, an analyst at research firm PrivCo.
"We like Weibo," Turlip said. "It has a lot of good going for it, including a strong mobile and social media strategy."
Weibo raised $286 million by selling 16.8 million shares, 3.2 million less than planned and down from the $380 million it had hoped to raise.
Article Raised Concerns
Concerns about Weibo surfaced when Britain's Telegraph newspaper on Jan. 30 published a story, based on a study it sponsored, that suggested "a dramatic drop in activity" on the microblogging site. The drop in usage comes "in the wake of an aggressive campaign by the Communist Party to intimidate influential users," the article said.
China censorship is one of the largest risks facing Weibo, Turlip says, but he adds that others also have to operate in the heavily censored media environment. Instant messaging site WeChat, a Weibo rival owned by Alibaba rival Tencent Holdings, faces the same issue, he points out.
New numbers from Weibo show that its monthly active users rose 11% in the first quarter from Q4. Weibo also has reported having 144 million monthly average users as of last month, up 35% from 107 million a year ago.
"Weibo's monthly user growth has been strong and consistent," Turlip said.
Weibo reported 2013 revenue of $188.3 million, up 186%. It reported a net loss of $38.1 million vs. a net loss of $102.5 million in 2012. In the fourth quarter, Weibo reported net income of $21.5 million on revenue of $71.4 million.
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