LINE, a South Korea based messaging app and Asia’s most popular, will seek an initial public offering on both the Japanese and New York stock exchanges. The LINE IPO will mark the first time an application has listed on a major stock exchange – let alone two different ones.
One of the most significant things in our lives is our mobile phone. It’s constantly at our side, from the morning when the alarm goes off, throughout the day and into the night. Integral in the process of everyday communication on our mobile phones are messaging applications. These apps take up much of our phone browsing time, connecting millions, if not billions of people, and it makes up an interesting market.
A Small but Highly Competitive Market
Consisting of just a few big players worldwide, the market for messaging apps is a highly competitive one. With more people logging onto social media, especially the middle-aged population, this app market is a very lucrative one. Similar to the social media giant Facebook, they are free to use but the creators generate their revenue through paid advertisements and in-app purchases for custom made characters and game points.
The current global market leader is the messaging app WhatsApp, with more than 900 million monthly users as of January 2016. It has been nearly two years since the WhatsApp name has been bought Facebook for $19 billion, the largest acquisition for an app to this date.
The acquisition happened not because Facebook was not doing well. Already generating a great deal of revenue from its ads that effectively targets the target market, the platform was looking to grow even bigger and still stay relevant in the world of messaging apps. Currently at over 800 million monthly users, Facebook has had a successful journey since its inception in in 2004. With a successful IPO in 2013 opening at below $50, it’s seen its share price double in barely 3 years.
LINE IPO: The Largest Public Offering for a Phone Application
Many messaging apps were created to generate revenue through accumulating more users. However, a noteworthy app called LINE from Korea’s Naver was not founded with that goal in mind. With a much more noble goal of connecting people during Japan’s devastating 2011 earthquakes and tsunami, LINE was formed.
It is owned by Naver, Korea’s largest search engine, which hopes to achieve the global success that has eluded Korean internet companies to this date. And for a product that has only been in the market for over 5 years, it is doing reasonably well and the company is looking for an IPO in New York and Tokyo.
LINE has 212 million monthly users, and despite doing well in most Asian countries, it still has a lot to catch up to in the more western countries. Even though the app is the market leader in Japan, Thailand, Indonesia, and Taiwan, it is especially losing out in the US.
The firm is concentrating its efforts on developing more diverse services to attract more users to the app. They realize that the standard format which appeals to Asian customers will not work in most other markets, which is why their CEO says they are, “fine-tuning individual services for different markets”.
In terms of revenue, the app is second to none. It has long been the most profitable app on both the Apple Store and Google Play.
One of the key goals of the LINE IPO, besides raising funds, is to propel LINE’s growth in international markets. It is deemed to be a necessary move if LINE is to gain more users in Europe and North America.
Currently, LINE is planning to have a massive US$3 billion dual IPO on the New York and Tokyo stock exchanges. The dates haven’t been decided, but many expect that the firm will move the IPO date to the third or fourth quarter of 2016. The IPO deal is regarded as large and has major investment banks such as Morgan Stanley, Goldman Sachs, JPMorgan, and Nomura working on it.
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