SINA Corp (NASDAQ: SINA) subsidiary Weibo Corp recently filed an amended F-1, under which it offered 20 million American Depository Shares (NYSE: ADS) at a price range of $17.00 to $19.00. At the mid-point of the price range, Weibo expects to raise $360.0 million.
Launched by SINA in Aug 2009, Weibo is also known as China's Twitter (NYSE: TWTR). Weibo primarily offers short messaging/micro blogging service in Chinese and has approximately 143.8 million monthly active users (MAUs) worldwide. Goldman Sachs (NYSE: GS) and Credit Suisse (NYSE: CS) are the primary underwriters.
It is noteworthy that Weibo selected Nasdaq (NASDAQ: NDAQ) for listing and will trade under the symbol “WB.” Post-IPO, SINA's stake in Weibo will decline to 58.0% from 78.0%, while Alibaba's stake will jump to 32.0% from approximately 19.0%. Alibaba invested approximately $585.0 million in Apr 2013.
Through the ADS issue, the public will own 9.0% and management and employees will own 1% (down from 2.7%). Per Forbes, Weibo appears to be fairly priced based on its current valuation of $4.0 billion, which is approximately one-thirteenth of Baidu's (NASDAQ: BIDU) market cap of $52.0 billion.
Weibo generates advertising revenues mostly from display ads, which were introduced in 2012 and to a much lesser extent from promoted feeds, which were introduced in 2013. The company's revenues increased significantly from $65.9 million in 2012 to $188.3 million in 2013.
Advertising and marketing contributed 78.8% of revenues in 2013. Mobile revenues accounted for 28.0% of SINA's advertising and marketing revenues in 2013.
We believe that Weibo's post-IPO performance will significantly depend on its mobile user growth and monetization efforts. However, intensifying competition from Tencent's Wechat and Weixin remains a major headwind.
Moreover, a successful Weibo IPO will boost SINA's share price going forward. However, strict Chinese government regulations and concerns related to accounting standards can dampen Weibo's IPO.
Currently, SINA has a Zacks Rank #5 (Strong Sell).
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