(Adds valuations and comparisons with Internet sector peers,
latest stock action)
By Alexei Oreskovic and Edwin Chan
SAN FRANCISCO, April 17 Shares of Weibo Corp
rose 19 percent in their U.S. debut on Thursday, sweeping
aside concerns that Chinese censorship will hurt the growth of
the country's Internet sector and broader worries about lofty
Investors are scrutinizing the biggest debut of a Chinese
Internet company in years, hoping for clues as to demand for the
highly anticipated IPO of far larger e-commerce giant Alibaba
Group Holding Ltd IPO-ALIB.N.
Weibo Corp's gains came after the owner of a Chinese
Twitter-like messaging service priced its shares at the bottom
of a target range of $17 to $19, and cut its offer by 16
percent, to 16.8 million American Depositary Shares from 20
The stock rose as high as $24.48 in the afternoon, briefly
valuing the company at about $4.7 billion. It closed at $20.24,
up $3.24, at 4 p.m. in trading on the Nasdaq Stock Exchange.
That surge caught some investors off-guard because of its
well-known susceptibility to unpredictable Chinese censorship
and the uncertain outcome of intense domestic competition with
the likes of Tencent Holdings Inc.
At $24, near its Thursday high, Weibo Corp is trading at
around 26 times 2013 sales, higher than Facebook Inc's 19
times and Chinese Internet search-leader Baidu Inc's
roughly 2 times, but still lagging Twitter's multiple of 40.
The strong debut gave fellow Chinese Internet companies a
lift. Parent Sina Corp rose more than 6 percent,
video-streaming site Youku Tudou Inc was 3 percent
higher, and social network RenRen gained 3 percent.
"It's overdone. These are very speculative names that have
tremdnous uncertainty," warned Michael Yoshikami of Destination
Wealth Management. "It's very similar to 1999. The big investors
are looking past the current numbers to whatever the future
"One day, valuations will matter. Just not today."
TWITTER IN NAME ONLY
Weibo, in which Alibaba owns a stake, often prompts
comparisons with Twitter but its market value remains a fraction
of the San Francisco company's. At Thursday's close, Twitter was
valued at about $26 billion.
Weibo Corp's offering, whose lead underwriters were Goldman
Sachs and Credit Suisse, raised $286 million, much of which will
go to its parent. It is controlled by Web portal company Sina
Corp, whose stake falls to 56.9 percent from 77.6 percent after
Alibaba, which paid $585.8 million for an 18 percent stake
in the company last year, will increase its holding to 32
percent and appoint a director to the board.
Weibo, whose name means "micro blog" in Chinese, has grown
at breakneck speed in a country where Twitter is banned, but
there's evidence that its user growth has slowed as China cracks
down on criticism of the ruling Communist Party.
A rule that took effect in September imposes a prison
sentence of up to three years for those who knowingly share
false information online. That had a chilling effect.
Research commissioned by Britain's The Telegraph found that
posts fell as much as 70 percent after rule was announced.
And it's also battling intense domestic competition. People
who once used sites such as Weibo's are now flocking to
messaging apps such as Tencent's WeChat.
Unlike Weibo, WeChat allows users to communicate among
private circles of friends. The service leaped from 121 million
global monthly active users at the end of September 2012 to 272
million in just a year.
Yet WeChat itself isn't immune to government censorship.
Last month, authorities closed dozens of popular accounts,
including those held by widely read columnists and investigative
journalist Luo Changping.
"People had concerns that there's some competition over
there and that engagement on Weibo may be challenged in the
future, but I think Weibo is still a social media platform, that
people still use it every day," said Henry Guo of JG Capital.
"I'm expecting the censorship and monitoring to continue.
But I don't see any risk as far as Weibo's existence."
Weibo Corp's sterling debut could pave the way for its
peers. Alibaba is expected to file as early as next week for a
U.S. IPO that could raise as much as $15 billion. That would
make it the biggest internet company IPO since Facebook Inc's
$16 billion coming-out party in 2012.
U.S. IPOs raised more than $18 billion in the first three
months of the year, making it the best quarter in more than a
decade. Technology companies raised about $4 billion of the
total, compared with $1 billion in the same period last year.
But investors may be having second thoughts as valuations --
particularly for tech and biotech companies - become stretched.
The Nasdaq Composite index has fallen about 6.5 percent
since its March 6 high, and recorded its biggest one-day drop in
two and a half years last week.
"This is not as bad as 1999..., these are real companies
with real sales and revenue," Yoshikami said. "But while it may
not be as bad, it's certainly not an environment where
(Additional reporting by Tanya Agrawal in Bangalore and Yimou
Lee, Elzio Barreto and Denny Thomas in Hong Kong; Editing by Ted
Kerr and John Pickering)