Sina Weibo files for $500 million U.S. IPO

SAN FRANCISCO Sat Mar 15, 2014 4:05am IST

A picture illustration shows icons of WeChat and Weibo app in Beijing, December 5, 2013. REUTERS/Petar Kujundzic/Files

A picture illustration shows icons of WeChat and Weibo app in Beijing, December 5, 2013.

Credit: Reuters/Petar Kujundzic/Files

Related Topics

Stocks

   

SAN FRANCISCO (Reuters) - Twitter-like messaging service Weibo Corp filed on Friday to raise $500 million via a U.S. initial public offering, as Chinese companies flock to the American market in record numbers to take advantage of soaring valuations.

Weibo, owned by Sina Corp (SINA.O), becomes the latest Chinese Internet giant to tap U.S. markets, following on the heels of search service Baidu and its own corporate parent.

But underscoring challenges facing Internet firms operating in a heavily censored and tightly controlled media environment, Weibo warned investors in its IPO filing about uncertainty arising from Chinese government regulation.

It highlighted in particular a regulation that came into effect in September, under which Internet users who knowingly make or share information considered defamatory or false could face up to three years' jail time in China.

"The implementation of this newly promulgated judicial interpretation may have a significant and adverse effect on the traffic of our platform and discourage the creation of user generated content," the company said in its filing.

It also warned about potential government intervention in its encryption tools and software - used to prevent spying while safeguarding the privacy of users and their posts.

Weibo said that Beijing requires all "cipher code" products to be registered with the government, though it was unclear whether this applied to social media encryption.

"Because these regulations do not specify what constitutes a cipher code product, we are unsure as to whether or how they apply to us and the encryption software we utilize," the company said in its prospectus.

COME ONE, COME ALL

Still, U.S. investors have long shown an appetite for Chinese companies' stock, hoping to share in some of the spoils of the world's fastest-growing major economy.

U.S. markets may see more IPOs from Chinese corporations in 2014 than in any year since 2010.

Weibo's revenues leapt almost three-fold to $188.3 million in 2013, from $65.9 million in 2012. And its net loss shrank to $38.1 million in 2013 from $102.5 million the previous year.

But its user growth is at risk of tailing off after three years of explosive expansion, as newer messaging apps such as Tencent Holdings Ltd's (0700.HK) WeChat draw users away.

In January, an official government-backed Internet organization reported that user numbers for Chinese microblogs, including Sina Weibo, had fallen 9 percent in 2013.

However, Weibo said the number of its daily users had risen 36 percent to 61.4 million as of the end of December, from the same time a year before.

Weibo hired Goldman Sachs and Credit Suisse to manage its U.S. debut, which it said would boost brand recognition and help retain talent.

Its proposed $500 million target is an estimate worked out solely for the purposes of calculating registration fees.

(Reporting by San Francisco Newsroom. Editing by Andre Grenon and Ken Wills)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Wipro Results

People walk in the Wipro campus in Bangalore June 23, 2009. REUTERS/Punit Paranjpe/Files

Wipro sees rosier end to year as U.S. clients spend

India's third-biggest software services firm Wipro Ltd , under pressure to improve lacklustre sales growth, said it saw a rosier end to the year as more confident U.S. clients increase spending.  Full Article 

Reuters Showcase

New Email Service

New Email Service

Google launches new email service dubbed "Inbox".  Full Article 

Apple-1 Auction

Apple-1 Auction

Early Apple computer sells for $905,000 at auction.  Full Article 

No More Nokia

No More Nokia

Microsoft looks set to drop Nokia name from smartphones.  Full Article 

User Data Security

User Data Security

Apple CEO discusses security with top Chinese official amid hacking claims - Xinhua.  Full Article 

Patent Wars

Patent Wars

Big Tech winning battle with 'patent trolls'.  Full Article 

Record Season

Record Season

FedEx expects record peak volume of 22.6 million packages on Dec. 15.  Full Article 

Yahoo Earnings

Yahoo Earnings

Yahoo ekes out Q3 revenue gain despite display ad weakness.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage