Weibo IPO downsized amid market share doubts

China's Twitter-like microblogging network Weibo downsized its IPO on the NASDAQ stock market Thursday, with the company still fighting to defuse doubts from foreign investors that the future of the service could be stymied by China's Internet monitoring.

Weibo Corp floated on the NASDAQ at the lower end of their IPO price at $17 per American Depositary Shares (ADSs), a possible consequence of slowing user growth.

It would sell 16.8 million ADSs on Thursday, less than the 20 million ADSs it had planned. The expected IPO price ranged between $17 and $19 per ADSs.

Analysts said that US investors are unlikely to show as much interest in Weibo as they did when Twitter went public last November.

Twitter stock opened at $45.1 apiece on the first day of trading on the New York Stock Exchange, 73 percent above its IPO price of $26.

Weibo, on the other hand, opened at $16.27 on Thursday in NASDAQ, 4.3 percent below its IPO price.

"Weibo seems to have entered the capital market at the wrong time. Internet stocks in the US have underperformed since March. This is fine-tuning after a previous boom," Liu Dalong, an industry analyst with Beijing-based market research firm iResearch, told the Global Times Thursday.

Owned by Chinese Internet giant Sina, Weibo says it has more than 143 million monthly active users and the number of daily active users tops 66 million.

When it filed to go public in the US, Weibo warned investors that "regulation and censorship of information disseminated over the Internet in China may adversely affect our business and subject us to liability for information displayed on our platform."

Banned content includes material that "compromises national security," or that which "disseminates rumors, disturbs social order or disrupts social stability." Obscene or pornographic content is also banned, said Weibo.

In 2013, China launched a campaign to crack down on online rumormongers. These include Charles Xue and Qin Huohuo, both of whom were dubbed "Big V" on Weibo, or users with more than 500,000 followers. Qin was sentenced Thursday to three years in jail for online slander.

Some industry analysts have predicted the IPO will be overshadowed by monitoring issues.

"Such opinions are normal and may influence some people, but won't hinder the IPO … People should not make Weibo's IPO a political issue," Zhang Xin, an associate professor on public management at the Renmin University of China, told the Global Times.

"All governments consider information security to be very important. Media supervision is very common around the world," said Zhang, adding that Weibo's IPO could help push China's free-speech limits.

Weibo is also being challenged by WeChat, a mobile instant messaging service from Internet rival Tencent, with more Chinese Net users shifting away from Weibo.

The number of microblog users in China declined by 9.2 percent last year from 2012, according to a January report by the China Internet Network Information Center.

While Weibo has tapped into the mobile market, WeChat has attracted users with a range of features, which includes being able to pay bills online, Liu noted.

Weibo, launched in 2009, started to generate revenues in the first half of 2012, but still incurred a deficit of $274.9 million as of the end of December, according to regulatory filings.

The significant net losses would discourage IPO subscription as well, as the share price slide across the Internet stock board may draw stricter scrutiny of the company's financial performance, said Liu.

In early March, Weibo was valued at $5.1 billion, but this figure had slumped to just $3.46 billion on Wednesday, making the company half as valuable as Twitter, according to Bloomberg.

E-commerce giant Alibaba Group, which bought a $585.8 million stake in Weibo in April 2013, representing 18 percent of its ordinary and preferred shares, said in March that it would increase its stake to 30 percent.

This could only be good news for its US IPO, Cao Yujie, consultant director of Beijing-based IT market research firm CCW Research, told the Global Times.