Sina Corp. is plotting an overseas IPO for Weibo, China’s Twitter copycat, according to data compiled by research firm PrivCo. The company predicts Weibo will follow parent company Sina and list on the Nasdaq exchange.
The research puts Weibo’s value at around or below $8 billion, which is nearly double Sina’s market cap of $4.7 billion. “Weibo is worth more divorced than married,” PrivCo founder and CEO Sam Hamadeh, said in the company’s report.
Weibo earned $71 million in revenue Q4 of 2013, more than ever before and a 149 percent increase from the same period a year earlier. The company began monetizing in 2012 and brings in revenue through display ads, sponsored posts, games and premium memberships. Weibo counts more than 300 million users registered on its platform, according to IDG Connect. These numbers are sure to attract the attention of investors should an IPO materialize.
The company’s potential June debut will benefit another titan of the Chinese web: Alibaba. The e-commerce giant, rumored to be headed public soon itself, has an 18 percent stake in Weibo, which it bought for $586 million. (Sina holds 71 percent of the company, while Weibo employees and and directors take the remaining 11 percent). That same stake would swell in worth to $1.44 billion should Weibo sustain an $8 billion valuation. Alibaba may augment its share to 30 percent, in which case the company’s stake’s value would jump by $1 billion.
But the $8 billion valuation is not set in stone, and news of an IPO comes at a challenging time for Weibo. The company has lost momentum with customers; its user base shrunk 9 percent from 308.6 million to 280.8 million between 2012 and 2013, according to a report by the China Internet Network Information Center (CNNIC). Usage also dropped 9.2 percent from 54.7 percent to 45.5 percent. Fierce competition has also built Weibo and WeChat into arch rivals. The CNNIC’s report says 37.4 percent of Weibo users that left the platform took up with WeChat. And Weibo, once seen as a sanctuary for free-flowing discussion, has been dogged by reports of online censorship. One blog, “Blocked on Weibo,” lists words that won’t generate search results on the platform, or could get a post deleted or hidden from others.
China has only just thawed its domestic IPO freeze, and both the NYSE and NASDAQ prove compelling alternatives to listing at home. The former’s composite index offered a one-year return rate of 18.46 percent, while NASDAQ boasts 36.92 percent.
Alibaba maximized its listing options by reportedly getting the okay from both the NYSE and NASDAQ to debut on either exchange. The company’s decision to (maybe) IPO outside of China most likely stemmed from its issues negotiating with the Hong Kong Stock Exchange. But a local listing hasn’t yet been ruled out. Meanwhile, Chinese companies like Qunar and LightInTheBox have recently traded local debuts for foreign ones, and China’s reported second-largest e-commerce company, JD.com, plans to IPO in New York.
The U.S. has only recently opened exchanges back up to Chinese listings, as accounting scandals in the past left investors feeling sour. Now major Chinese players like Sina Weibo and JD.com head for an American offering. For Weibo, making its way to the U.S. could capitalize on a hot trend and help the company make a splashy debut in a new market. The platform needs more people, and one reason it may be going to America is to find them there.