SINA Corp (NASDAQ:SINA): Investors Gets Wary Before The Weibo’s IPO

Denver, CO, 04/08/2014, (Avauncer.com) – SINA Corp (NASDAQ:SINA) is not having a good time in the market from last one week as investors get wary before the initial public offering of its social blogging unit Weibo. The initial public offering will shrink SINA’s valuation. Weibo is expected to go public by offering 20 million shares for $17 to $19. The valuation can exceed to as much as $3.9 billion. It intends to use a part of the proceeds for repaying the loans to Sina. The social blogging is more of Twitter-like service offering the users with both social and media functionality.

Impact of IPO

The IPO will impact the stake of Alibaba Group Holding Ltd. that bought an 18% stake in Weibo last year. Alibaba’s stake will increase to 32%, whereas Sina’s stake would go down to 56.9% from 77.6%. Alibaba is the China’s biggest e-commerce company. It is going to buy the shares at 15 percent discount to Weibo’s IPO price. The increase in Alibaba’s holdings can be good for Alibaba but will have a negative impact on the Weibo’s IPO. After the sale SINA Corp (NASDAQ:SINA) will have 80% of voting power whereas Alibaba will have 15% of the voting power. There is news that Alibaba is also planning to go public in the U.S. soon.

The competition begins

The major concern that is seen here is the competition between WeChat and Weibo. Investors are expecting a tough tussle between the two platforms. It is a one side of the issue. The other side remains positive in the long run. WeChat is planning to extend its services further in the mobile internet world in China that will definitely help Weibo to get set as a mobile social media platform that provides the users with the real time information.

Monetarization issue

Another area that is under scrutiny is the monetarization part of Weibo. Investors are looking forward to see how SINA Corp (NASDAQ:SINA) uses the platform to generate revenue from the display ads. The company has done well on this aspect in the past but still investors are taking a cautious approach before the IPO.

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