Messaging app Line Corp yesterday rocketed in its Tokyo trading debut after an eye-popping jump in New York, as investors cheered the year’s biggest technology share sale.
The newly listed stock closed at ¥4,345 (US$41), up 32 percent from its initial public offering price of ¥3,300 and valuing the firm at about US$8.6 billion. On Thursday, Line shares began trading in New York after the US$1.3 billion initial public offering.
However, the company, which grew out of Japan’s 2011 quake-tsunami disaster, could face challenges boosting its popularity beyond Asia and some Spanish language markets, analysts said.
Photo: EPA
“Investors are giving Line high marks for its growth potential and the initial public offering should boost its name recognition,” said Hideki Yasuda, an analyst at Ace Research Institute in Tokyo.
“But Line already has a big number of users and I think it will be tough for them to increase that. What investors are focused on now is what Line will do with that large number of users to expand its growth through advertising revenue, for example,” Yasuda said.
Line, which is owned by South Korea’s Naver Corp, debuted overnight in New York where its stock soared about 27 percent by the close.
Line sold 35 million shares in all — about two thirds in the US — and said it would exercise an option to sell another 5 million shares, underscoring strong demand for the offering.
Line’s service lets users make free calls, send instant messages and post photographs or short videos, along with a host of other paid services.
It combines attributes from Facebook, Skype and WhatsApp with games and a mobile payment service also on offer.
However, what has set it apart so far is a huge assortment of cartoon “stickers,” which some too-busy-to-text fans rely on to communicate — a kind of animated language.
The stickers are hugely popular in Japan, especially among teenagers, and Line has been able to make money off them.
“If someone shares some good news with me, I can send them a sticker like ‘awesome!’ or alternatively ‘I am depressed’ when something sad happens,” Line devotee Akiko Mura said. “You can express yourself not only in words but also in images.”
The company counts about 218 million active monthly users — notably fewer than its bigger rivals — and is strongest in Taiwan, Japan, Thailand and Indonesia, but has relatively little presence in the US and Europe.
Line executives said proceeds from the share sale would initially be earmarked for developing in markets where the service is strongest.
“We will be focusing on our four key markets: Japan, Taiwan, Thailand and Indonesia,” Line’s chief financial officer Hwang In-joon said in a Bloomberg TV interview. “We will be using money for any investment opportunity to strengthen existing business.”
Last year, Tokyo-based Line posted revenue of ¥120 billion, up 40 percent from the year before, but booked an overall loss, which it blamed on rising staff costs and other expenses.
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