Sina Weibo (新浪微博), China’s answer to Twitter, debuted on the NASDAQ on Thursday with a 19.1 percent jump despite an initial public offering (IPO) that went out undersubscribed and priced lower 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 (阿里巴巴), the immensely profitable Chinese online commercial gateway that is preparing its IPO for the US 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 (趙廣民), the chief executive of Chinese online power Sina Corp (新浪), 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 said 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.
Weibo, launched in August 2009, is China’s largest social media service, with 144 million active monthly users.
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 period.
Chao said Weibo is rapidly building income from display and performance-based ads.
“There is no question that [Weibo’s] revenue growth is much higher than our existing portal business,” he added.
Chao also said China’s economic slowdown was also not a problem for Sina or Weibo, and could possibly work to their advantage.
“Maybe a downturn in the economy will have some impact on the advertising business we are doing, but over the longer term, we’re not concerned at all,” he said. “The Internet has proven that it is very resilient... What the Internet does is, it increases the efficiency of everything, and so sometimes in bad times Internet companies can perform better.”
In New York for the IPO, Chao ran into questions about China’s tough censorship of the Internet.
“There is no question that each country will have their own rules in terms of regulating the content industry or content behavior by users on the Internet... China is no exception,” he said. “We are very experienced in terms of complying with the laws and regulations in this area. So I don’t think it’s a big concern for us.”