A Twitter like company Weibo started its operation in 2009 in China. After making a huge initial success as a microblogging service provider there, the company now seeks funding for product, infrastructure, technical, sales and marketing developments. Plus, requirement of working capital will also be there. It goes without saying that only an IPO can help in raising the much required expansion fund. Seems like Weibo has planned this out already and filed a prospectus to raise $500 million through the U.S. initial public offering. So, what is Weibo’s IPO prospective? Is it going to be a less risky gaining opportunity for the investors?
Weibo’s past performance was quite mesmerizing. Despite the strict vigilance and law enforcements of China, the company was able to top the social networking industry. The service provider is very popular for its comprehensive and quick information distribution system, different advertising solutions and traffic generation expertise. As for profitability, the organization has also been able to boost its revenue in 2013, $188.3 million from $65.9 million in 2012. Its major subscribers ranges from – common Chinese citizens, celebrities, business enterprises, game developers and media outlets.
However, experts believe Weibo IPO is not going to be an easy way to get a fortune. Why so? Everything seems fine as far as company’s popularity, product and service usability and user base are concerned. Despite that, the company shares could be a little risky if factors like competition and excess dependence on advertising are taken into consideration. At present, a company’s success in a given market is decided based on product differentiation, growth opportunities and willingness for diversification.
In the market, where Weibo is going to be public soon, lots many similar service providers already exist. The market is over-crowded with industry dominators like Facebook, Twitter and LinkedIn. Facebook is on the road of product innovations and technical upgrading by now. Weibo has to work close to these competitors. To be able to become noticeable, the organization has to think and come up with new service ideas much ahead of its competitors. Will Weibo be able to do that? An investor looking for answers must try to understand the company’s evolution trend. Investors have to find out and understand how the company was in terms of research, product and service development in the past and how it has transformed at present.
As the company’s major returns come from advertising, there can be chances of revenue challenge in the future. Although it was a major player in the huge Chinese market, Facebook and Twitter already lead the advertising sphere in the U.S. Weibo has to reduce its dependence on advertising revenue. It has to plan and execute new strategies if it doesn’t want to lose its revenue or market share. So, does the company have the backup of masterminds to work on strategic developments and roll out the fierce rivalry? From this perspective, the company’s success and growth opportunity will depend on new partnership opportunities. In all, there are lots to consider if investors are trying to analyse Weibo’s IPO prospective. Also, investors should make a note of the company’s past as well as present accomplishments to be able to get some insights.