China’s largest social media company filed for an initial public offering on the New York Stock Exchange. They join many other large cap Chinese companies such as Sinopec (NYSE: SNP), Home Inns (NYSE: HMIN) and Baidu (NASDAQ: BIDU) that also have their stock listed on U.S. exchanges.

Weibo, which means “microblog” in Chinese, is a website comparable to Twitter and had 129 million users in December of 2013. The company obtained ad revenue of US$56 million last year: an increase of 156%. The company receives income from advertisements, as well as a premium subscription.

But Weibo faces challenges in a restricted media environment. It warned investors about the risk of uncertainty regarding Chinese government legislation in its IPO filing. A law that came into effect last September was specifically mentioned, where those who make or share defamatory content online can be faced with imprisonment.

“The implementation of this newly promulgated judicial interpretation may have a significant and adverse effect on the traffic of our platform and discourage the creation of user generated content” , said the corporation in its filing.

However, investors in the United States have still shown much interest in stocks from the world’s second largest economy, and 2014 looks to be a big year for newly listed Chinese companies. Alibaba, China’s largest online retailer is also filing for an IPO this year.

Credit Suisse and Goldman Sachs will be underwriting Weibo’s shares and plan to raise $US500 million.

 

About Lee Decker

Lee Decker is a serial entrepreneur who is close to the Silicon Valley start-up scene and is the founder of several successful companies. He lives in California and is InvestAsian's CTO and Start-Up Analyst.
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