Weibo's done half the job that Twitter has in turning its microblogging users into earnings. That may explain why the Chinese company is seeking as little as half the valuation in its initial public offering. Weibo, owned by Sina and Alibaba Group, plans to offer 20 million American depositary shares for US$17 to US$19 apiece, according to an April 4 regulatory filing. The deal was scheduled to be priced in New York yesterday. The Beijing-based microblogging unit is marketing its IPO at a valuation as low as 18 times last year's sales, compared with a stock price equal to about 39 times for Twitter. Weibo was taking in US$1.46 in revenue per monthly active user at the end of last year, compared with US$2.76 at Twitter. "The Twitter platform lends itself well to brand advertising, which is why the monetisation of Twitter is stronger than Weibo's," said Neil Doshi, an analyst at CRT Capital Group. "That explains the valuation gap between the two." The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the US, sank 2.5 per cent to US$35.29. Sina, which has a 78 per cent stake in Weibo, rose 1.3 per cent to US$53.09. Weibo is proceeding with its offering plan amid a sell-off in global technology companies that has pushed the Nasdaq Composite Index down the most since 2011 on April 10. Concern is also mounting that China's expansion is faltering. Data on Tuesday showed that the country's broadest measure of new credit fell 19 per cent in March from a year ago. Weibo had 129.1 million monthly active users at the end of 2013, compared with more than 240 million for Twitter, filings from the two companies show. At the high end of Weibo's marketed range, the firm is seeking a valuation of US$3.9 billion, or about 21 times last year's sales of US$188.3 million. The multiple would be 18 times if it were to price at the low end of the range. Twitter, which had a market capitalisation of US$25.8 billion, or 39 times sales, has not yet posted a profit. The stock has surged 75 per cent since its November IPO. "Either Weibo is incredibly undervalued, which we think it is, or Twitter is ridiculously overvalued because there's no metric or risk that applies to Weibo that does not apply to Twitter," said Samer Hamadeh, the chief executive of PrivCo Media, which compiles and analyses data on closely held companies. "It's a terrific situation for public investors." At its proposed range, Weibo would raise as much as US$380 million, some of which it plans to use to pay debt owed to Sina, the corporate filing showed. The company plans to list on the Nasdaq Stock Market under the symbol WB. It will begin trading on April 17.
