China’s Weibo Could Go Public at a Deflated Price

China’s Twitter-like micro-blogging service Weibo filed with the U.S. Securities and Exchange Commission (SEC) on Friday to offer 20 million American Depository Shares at a price of $17 to $19 each, in an initial public offering (IPO) that could raise as much as $380 million. The move values the company at about $3.9 billion after its IPO, a smaller number than anticipated by some market participants.

Weibo is owned by Sina Corp and has around 130 million active users per month. Some analysts estimated that the company was worth $5 million to $6 million. According to Sina Finance, Chinese e-commerce giant Alibaba Group Holding Ltd. purchased an 18 percent stake in Weibo from Sina last year, and valued Weibo at $5.86 billion.

The deflated IPO price comes at a time when the micro-blogging service is thought to be losing users to mobile messenger service WeChat, owned by Tencent Holdings, according to reports by the Wall Street Journal.

Despite the smaller number, however, some analysts predict that Weibo’s devalued IPO would give investors a more comfortable entry point at purchasing shares.

Weibo will list its common stock on the Nasdaq with the ticker “WB” instead of “SINAWB.” The move aims to show that its parent company Sina is focusing heavily on its micro-blogging service.

Advertising and marketing revenue for Weibo nearly tripled to $148.42 million last year. And its total revenue increased from $65.9 million to $188.3 million in 2013.

Weibo is expected to go public this month. After the offering, Sina will hold 56.9 percent of Weibo, while Alibaba will see its stake rise to 32 percent.

Image via Shutterstock.

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