Sina’s weibo may float in US by 2Q2014

Weibo

Sina Corp., listed in NASDAQ and the owner of China’s microblogging service Weibo is planning to take it public in the US., reports WSJ. With this the company is looking forward to raise USD 500 million. As said, Goldman Sachs & Credits Suisse group AG has been appointed as the lead managers and the IPO is expected to come in the second quarter of the year. Sina Corp. currently holds 71% stake in Weibo and is listed at Nasdaq (US).

Last year, the social media firms facebook and twitter have also came up with their IPO in the market. Where on one hand, facebook IPO had to suffer some major pitfalls, Twitter IPO did significantly well. However, both are currently trading much below their initial IPO price.

So what fate will Weibo receive if it gets its IPO on stage? Well, looking at its current market position, launched in 2009, Weibo is one of the most popular sites in China and is said to be in use by over 30% of Internet users in the country. Considering the posts of multiple publications, it can also get a boost from Alibaba, as it plans to increase its stake to 30% from 18% (in case, the IPO takes place).

However, with more than $60 million daily active users, it has been slow to make money lately. This is mainly because of the concern that the ads will turn away the users. Also Weibo has not shown much ability to innovate in the rapidly changing social networking space.

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Analysts currently reckone Weibo to be worth anywhere from USD 3.2 billion (based on alibaba’s purchase of an 18% stake last year) to USD 6 billion. Normura analyst Jin Yoon and Yong Wang started twitter’s 2011 valuation as benchmark, applied a 50% discount, and concluded that Weibo is worth around USD 3.7 billion, or two third of the Sina’s current market capitalisation. Thus suggesting that a small ownership stake is being offered.

According to the research report issued by China Internet Network Information Center (CINIC) there has been an increase in the overall chinese internet users by 9.5percent from last year reaching 618 million at the end of december. And  80 percent of the chinese internet users now access the web over their smartphone, translating to more than 500 million mobile internet users.

This increase in the number of mobile users has led to a rise in the newer generation of sns services led by Tencent’s wechat, which are optimized for mobile users. This latest migration, thereby, shows how quickly things can change in china’s young internet space. Another report shows that deals in the tech sector has increased, which has provided a boost to the equity markets globally.

If talked about the Indian scenario, there are few dotcom companies such as MakeMyTrip, Rediff India, Sify that have made it to the Nasdaq. Also, last year success of JustDial IPO has significantly increased openness in the market for investment in Internet business. The filing of confidential IPO by Homeshop18 in 2012 also support the trends so far.

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Following Facebook’s USD 19 billion purchase of whatsapp last week, total value of tech deals in 2014 has reached USD 50 billion, making the year 2014 a busiest year since 2000 which was the year of dotcom bubble. Given these circumstances, it seems timely for Sina to monetize which might give it a better valuation than later in an year or so.

Feature image via Mashable

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