Weibo US listing expected stronger performance
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E-mail Cntv, April 19, 2014
After a chill-out period a few years ago, Chinese companies are now coming back to the United States to go public. More than a dozen Chinese companies have filed so far. Micro-blogging giant Weibo has started trading in the U.S., but things haven’t gone quite as planned. Karina Huber joins us for more on this.
Executives at Weibo celebrate the company's first day of trading on the NASDAQ in New York. But the listing got off to a rocky start. Investors bought fewer shares - and at a lower price - than Weibo had hoped. The company raised 286 million dollars in the offering. That's a little more than half of what the company was targeting. Analysts like Echo He at Maxim Group says investors are worried about growing competition from text and messaging app WeChat.
Weibo's number of monthly active users continues to grow. In March it had 143 million, but WeChat now dominates with more than 355 million. Another potential risk for Weibo investors is strict internet regulations by the Chinese government.
But the timing of Weibo's U.S. offering was also less than ideal and that likely had an impact. The IPO market was red hot at the beginning of the year, but in recent weeks the majority of U.S. IPOs have priced below or on the low end of their range and many are trading below their IPO price.
That wasn't the case with Weibo. Its shares closed 19 percent higher than its IPO price. Analysts believe in the long run Weibo could be a good buy.
Josef Schuster, founder of IPOX Schuster said, "You want to look at it as a diversification play in a portfolio that should include Facebook, Twitter and probably Tencent and others."
While the pricing of Weibo's IPO may have been a disappointment for some, the pop in the secondary market is a good sign for Chinese tech IPOs.
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