FAST NEWS: Weibo Launches Hong Kong IPO

The latest: Weibo Corp. (9898.HK; WB.US), often called the “Twitter of China” has launched a secondary listing in Hong Kong consisting of 11 million of its Class A ordinary shares. Subscriptions for the IPO shares began today and will run through noon on Dec. 2, with a maximum fundraising target of HK$4.27 billion ($547 million).

Looking up: Weibo’s monthly active users (MAU) as of September reached 573 million, and its revenue has grown at a compound annual rate of 26.7% in the past four years. The company’s revenue in this year’s fourth quarter is expected to grow by 15% to 20% year-on-year, showing the group is taking advantage of its relatively high growth to raise additional funds.

Take Note: Each of Weibo’s Hong Kong shares is equal to one American depository share (ADS), with the offer price capped at HK$388. That translates to a maximum price of $49.76, compared with Weibo’s latest after-hours trading price of $41.80 last Friday. The stock has lost about a third of its value since mid-July when China began enforcing a new data security law for tech companies listing overseas.

Digging Deeper: As one of China’s three top social media platforms, Weibo has a large amount of sensitive user data that is currently at the center of a regulatory storm as China starts enforcing the data security law. Another Hong Kong internet IPO for NetEase Cloud Music (9899.HK) got a recent lukewarm response over similar concerns, and ended up pricing at the middle of the IPO range. Weibo’s listing is the latest in a growing string of similar secondary IPOs by New York-listed Chinese internet companies.

Market Reaction: Weibo’s ADSs weakened by 0.56% last Friday, and fell another 2.3% in after-hours trading to $41.80.

Translation by Jony Ho

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