Not Quite Twitter: Weibo IPO Fizzles Out

What's This?

Employees work at their desks at a Sina Weibo office in Beijing on Aug. 1, 2012.

Image: Alexander F. Yuan/Associated Press

By Seth Fiegerman2014-04-17 13:04:39 UTC

Weibo may be known as China's version of Twitter, but it's initial public offering on Thursday is shaping up to be very different.

Weibo priced its IPO at $17 a share, according to multiple reports, which comes in at the low-end of its proposed price range. At that price, Weibo will raise less a little more than $285 million from its IPO and be valued at around $3.5 billion.

See also: Weibo May Look Like Twitter, But Its IPO Probably Won't

By comparison, Twitter priced shares above its price range when it went public six months ago and raised $1.82 billion from the IPO. Twitter was valued at just more than $14 billion at the time of its IPO and currently has a market cap north of $25 billion, dwarfing that of Weibo.

The Chinese microblogging site had reportedly been looking for a valuation of as much as $8 billion at first, but demand for its IPO was less-than-expected due to slowing user growth, concerns over Chinese censorship and a broader shift in sentiment in the market.

While Weibo's revenue more than doubled last year, its user numbers have been less impressive. Weibo had 143.8 million monthly active users in the March quarter of this year, up from 107.3 million the same quarter a year earlier. Twitter had 241 million monthly active users in the fourth quarter of 2013.

To make matters more complicated, Weibo emphasized the complications of Chinese censorship in the Risk Factors section of its IPO filing. The government can and has cracked down on Internet companies for display content that, in Weibo's words, "impairs the national dignity of China." If Weibo goes along with the government, it could lose some of its users; if it doesn't, it could be fined or have some of its licenses revoked.

The stock market — and particularly tech stocks — have also been less frothy in recent weeks than was the case when Twitter went public in November. As Dan Primack at Fortune points out, all 8 IPOs this week have priced below their offering range.

Sina, one of the largest Chinese web portals, launched Weibo (which literally translates to "microblog") in 2009. The service quickly attracted tens of millions of users and became the leading microblogging site in the country. More recently, however, Weibo has struggled to compete with mobile upstarts like WeChat, a mobile messaging service.

Topics: Business, stocks, Twitter, weibo