The Low Post News

Shares of Sina’s Weibo Surge 19% in Debut

Weibo was first launched in August of 2009 and is the largest social media site in China with more than 144 million active users monthly.

On Thursday, the Chinese answer to Twitter, made its Nasdaq debut with a jump of 19% despite an IPO that was lower priced than hoped and undersubscribed.

In a run of buying suggesting that the waters on Wall Street are still welcoming to technology high flyers that are still loss-making and to firms from China in general, Weibo shares increased by $17 dollars to as much as $24.28 prior to settling back for the day on $20.24.

Weibo’s debut is great news for another Chinese firm Alibaba, the hugely profitable online commercial gateway from China that is also preparing and IPO for later this year in the U.S.

Weibo was seeking to raise as much as $380 million through the sale of its 20 million shares for $19 apiece. However, underwriters only could find a demand for just over 16.8 million Weibo shares at the lower end of the spectrum at $17, which brought in more than $287 million.

Charles Chao, the CEO of Sina Corp a powerhouse online in China and the parent company of Weibo, shrugged off the IPO under subscription saying it was most important to achieve the Wall Street listing and a separate identity for Weibo.

Chao said the market was very tough because of a rather overall soft IPO market at this time.

Chao added that over the longer term, if the company can execute its strategies and innovation in a focused manner, then shareholder value would be created.

Weibo is often compared to Twitter. However, by allowing more functionality and content, it has overlapped with Facebook also. In China, both Facebook and Twitter are banned.

Weibo has not yet produced a profit losing more than $38 million in 2013 on $188 million in revenues. During the first quarter of 2014, there were over $47 million in profit.

Revenues jumped by close to $68 million for those first three months.

Chao has said that Weibo was rapidly building its income thanks to performance based and display ads.

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