Weibo Is Just a Half-Twitter as IPO Seen Fetching 18 Times Sales

By Bloomberg | Examiner (Washington, D.C.), The, April 16, 2014 | Go to article overview

Weibo Is Just a Half-Twitter as IPO Seen Fetching 18 Times Sales


Bloomberg, Examiner (Washington, D.C.), The


Weibo's done half the job that Twitter has in turning its microblogging users into earnings. That may explain why the Chinese company is seeking as little as half the valuation in its initial public offering.

Weibo, owned by Sina Corp. and Alibaba Group Holding Ltd., plans to offer 20 million American depositary shares for $17 to $19 apiece, according to an April 4 regulatory filing. The deal is scheduled to be priced in New York today, according to data compiled by Bloomberg.

The Beijing-based microblogging unit is marketing its IPO at a valuation as low as 18 times last year's sales, compared with a stock price equal to about 39 times for Twitter. Weibo was taking in $1.46 in revenue per monthly active user at the end of last year, compared with $2.76 at Twitter, data compiled by Bloomberg show. Weibo is seeking a valuation between about $3.5 billion and $3.9 billion.

"The Twitter platform lends itself well to brand advertising, which is why the monetization of Twitter is stronger than Weibo's," Neil Doshi, an analyst at CRT Capital Group, which has the equivalent of a hold rating on Twitter, said by phone yesterday from San Francisco. "That explains the valuation gap between the two."

The Bloomberg index of the most-traded Chinese stocks in the U.S. slumped 1.5 percent, the most in a month, to 98.67 yesterday. The iShares China Large-Cap, the largest Chinese exchange-traded fund in the U.S., sank 2.5 percent to $35.29. Sina, which has a 78 percent stake in Weibo, rose 1.3 percent to $53.09.

Nasdaq slump

The Shanghai Composite Index rose 0.2 percent today, while the Hang Seng China Enterprises Index rose 0.1 percent.

Weibo is proceeding with its IPO plan amid a selloff in global technology companies that has pushed the Nasdaq Composite Index down the most since 2011 on April 10. Concern is also mounting that China's expansion is faltering. Data yesterday showed that the country's broadest measure of new credit fell 19 percent in March from a year ago while the money supply increased at the slowest pace on record.

Liu Qi, a press official at Sina, didn't answer a call seeking comment on the Weibo IPO. …

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