Major Chinese Social Media Site Weibo Debuts on NASDAQ

Major Chinese Social Media Site Weibo Debuts on NASDAQ

The Los Angeles Times reports that Weibo, a Chinese microblogging site à la Twitter, exploded on its first day of trading Thursday, skyrocketing up as much as 44% at its peak. 

Weibo’s American depositary shares were initially offered at $17-a-share, but by the time Nasdaq closed, the shares were selling at $20.24., rising 19% from the start. 

David Menlow, president of research firm, commented, “The company did miraculously, considering that virtually anything that had the letters ‘IPO’ in front of it over the last couple of weeks suffered a slicing session in terms of valuations… [the shares] headed up like a hockey stick.”

Weibo’s IPO started at $285.6 million. After 16.8 million shares were sold, the site’s value was roughly $3.5 billion; after its spectacular day, the value was $4.1 billion.

Originating in 2009 when the Chinese government started blocking social media sites such as Twitter and Facebook, Weibo was okayed because it internally censors the content on the site. Although some fans of Weibo assert it is encouraging free speech in China, others argue that it lets the government block or delete posts or entire accounts. Jason Q. Ng, the author of Blocked on Weibo, said that he searched 700,000 terms on Weibo and found 1,000 of them were blocked. The greatest number of blocked terms were Communist party members and 6-4, a term used for the June 4, 1989 Tiananmen Square massacre.

Weibo said its revenue grew from $65.9 million to $188.3 million in 2013; it added that its net loss dropped from $102.5 million to $38.1 million.

Kathleen Smith, principal of IPO investment advisory firm Renaissance Capital, said the initial pricing of the Weibo IPO, which was lower than generally expected, was a sign that the IPO market was stabilizing. She said, “It has become a buyer’s market, not a seller’s market… a necessary correction.”