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Weibo withstands weakness in tech

Thursday, Apr 17, 2014 - 02:19

April 17 - The Chinese online messaging company, Weibo, had a strong start in its Nasdaq debut, showing that investor appetite for Chinese tech IPOs remains strong, setting the stage for Alibaba’s highly anticipated debut. Lily Jamali reports.

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Weibo's Nasdaq debut Thursday proved investor appetite for Chinese IPOs remains strong. Even with the recent meltdown in tech stocks, China's latest tech offering at one point soared 42 percent above its initial $17 share price, and settled at just over $20 a share. The messaging service, considered the "Twitter of China", also staved off concerns about a recent slowdown in Weibo's user growth. The company has been around since 2009. Weibo Chairman Charles Chao says a slowdown is to be expected, but that there's plenty of opportunity ahead. SOUNDBITE: CHARLES CHAO, WEIBO CHAIRMAN (ENGLISH) SAYING: "It's only natural, given that we're in the fifth year, the growth rate has come down. But given the size of the market, and our user base, we're still growing at a very nice pace." You can't talk Weibo without mention of another Chinese tech company: Alibaba, which holds a stake in Weibo. The tech portal, owned in part by Yahoo, is expected to go public soon. Analyst Scott Kessler of S&P Capital IQ says when it does... SOUNDBITE: SCOTT KESSLER, HEAD TECH ANALYST, S&P CAPITAL IQ (ENGLISH) SAYING: "We think it's going to be a seminal bellwether IPO in the same vein as we saw 10 years ago when Google came public or when Baidu came public in 2005." Weibo's been used as a blueprint for what's ahead with Alibaba. Some analysts say that's a mistake. Alibaba is widely seen as an indispensible service in China's e-commerce landscape. Weibo -on the other hand- is a social messaging service operating in China's tightly regulated environment. Many users of Weibo, where messages are public, have fled to private messaging apps. In September, a rule took effect that threatens up to three years in prison for knowingly sharing false information online prompting, by one estimate, a 70% drop in posts on Weibo. Investors are also being mindful lately of signs that Chinese economic growth is slowing down, according to Kathleen Smith of Renaissance Capital. SOUNDBITE: KATHLEEN SMITH, PRINCIPAL, RENAISSANCE CAPITAL (ENGLISH) SAYING: "The situation in china and economic scenarios have not been all that favorable so there is a bit of caution." But based on its stock performance Thursday, investors seem willing to take their chances.

Weibo withstands weakness in tech

Thursday, Apr 17, 2014 - 02:19

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