Is Sina Setting Itself Up For A Large Weibo Pop?
For the last year investors have anticipated, debated, and even prayed that Sina (NASDAQ:SINA) would unlock the true value of its company and rollout and eventually divest its assets in Weibo. Yet now, with an IPO of Weibo lurking around the corner, shares of Sina are lower by 40 percent in 2014 and continue to fall. Does this mean that Sina is about to get an enormous Weibo-related IPO pop?
Weibo is China’s largest social media platform; it is essentially the Twitter (NYSE:TWTR) of China. It has 130 million users, and in 2013 it grew 190 percent to report revenue of $188 million. For 2014, analysts expect that revenue could top $400 million for Weibo; you can read its F-1 here.
As it relates to Sina, the company owns 77.6 percent of Weibo, and following the IPO, its stake will be 56.9 percent. As most investors expect, Sina will divest its holdings, and then use the cash to either acquire growth, buyback stocks, or pay a dividend.
With that said, expectations for Weibo’s IPO has declined in recent months. Essentially, the market for Chinese internet stocks has declined, and therefore original talks of a $7 to $8 billion market capitalization have not become a reality. Instead, Weibo is looking to raise $380 million in its IPO, giving it a market capitalization of $3.9 billion.