The soaring shares last Thursday afternoon belied a weak start. Weibo slashed the size of its initial public offering when it priced last night. It raised $286 million by selling 16.8 million shares at $17 each. That was at the low end of the $17-$19 range and less than the originally projected 20 million shares for sale. Then, shares actually opened below the $17 IPO price, at $16.26, before rebounding to be up 10% in the first few minutes of trading.
With 130 million monthly active users, Weibo generated $188 million in revenue in 2013, up from $66 million the year prior. While still unprofitable, Weibo’s net losses narrowed from $102 million to $38 million. Most of its revenue comes from advertising, with additional sales via games and other services. The company filed a preliminary prospectus in March. It was a subsidiary of Sina Corp, which owned 77.6% of the company, and Alibaba, which bought a 19.3% stake for nearly $600 million in April 2013.
Sina is China’s largest web portal, resembling Yahoo YHOO +0.11%. It went public in 2000 and now has a market cap of $3.76 billion. According to the latest prospectus, Sina was planning to sell about 24 million of its current 140 million Weibo shares in the offering, and the remaining would convert to Weibo’s new Class B shares. Sina will own 100% of that class, which has 3 times the voting power of regular Class A.
Weibo’s offering will be a test for Alibaba, which could file for its IPO as early as Monday. China’s largest ecommerce site did not sell any of its Weibo shares in the offering, and should own 74.3% of Class A. Jack Ma, the sixth-richest person in China, is Alibaba’s founder and chairman.