Weibo falls short of market expectations

NEW YORK — Weibo, the microblogging service formed by the Sina Corp, has been called the Twitter of China. But the company will carry a value well below that of its United States counterpart when it begins trading on the public markets.

Weibo has sold 16.8 million American Depositary Shares (ADSs) for US$17 apiece, raising US$285.6 million (S$356.8 million), an underwriter told Reuters. The company had planned to sell 20 million ADSs at between US$17 and US$19 apiece.

At that level, the social network operator will be valued at US$3.6 billion (S$4.5 billion). In contrast, Twitter ended trading on Wednesday worth US$26 billion.

For some time, Weibo has generated a fair amount of investor interest. It is the biggest of China’s microblogging services, with Alibaba Group, the online commerce titan, a major shareholder.

But Weibo’s IPO prospectus revealed that the company’s growth was not quite as impressive as analysts and investors had expected. There are also concerns about China’s highly censored media environment.

While Weibo’s prospectus showed that its revenue last year more than doubled to US$188.3 million and its loss shrank to US$38.1 million, its user base is far smaller than Twitter’s.

Weibo claimed 143.8 million monthly active users as of March 31, compared with the US company’s 241 million. Its performance pales in comparison with Alibaba’s, which disclosed a 66 per cent jump in fourth-quarter revenue and a more than doubling of profit on Tuesday.

The microblogging site is attempting to come to market at a time when both IPOs and technology stocks have suffered from growing investor scepticism.

From the time Weibo first publicly filed for its IPO on March 14, the Nasdaq 100 Index has dropped 3 per cent as of Wednesday amid a slump in technology stocks, as data compiled by Bloomberg has shown. AGENCIES