Weibo Corporation (NASDAQ:WB)

CAPS Rating: No stars

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Member Avatar TSIF (99.96) Submitted: 4/17/2014 4:46:30 PM : Underperform Start Price: $23.27 WB Score: +12.85

There have been a lot of IPO's lately and while I find them interesting to observe, I don't have the time to dive into them. Weibo Corporation caught my attention as a larger IPO, from China, with a Twitter like platform, or microblog as they call it. Listening to some early analyst speculation it appeared to be a flip whether it would take off. I set my thumb to downthumb it if it became pickable on CAPS and dove as a broken IPO, but watched it spike soon after it's delayed opening. Underwriters had apparently not been ready for the usual opening. The number of shares had been dropped and the IPO was priced at $17, the bottom of the $17-19 initial range. This usually doesn't bode well for an IPO, but Weibo proved them wrong as it rose 30% at one point soon after opening. I was regretting my downthumb qued to go and wished I'd hit it with an upthumb on the open. Things slowed as the shares traded hands multiple times. One thing I like to observe about an IPO is how many shares are issued initially, (often another smaller "over allotment lot" is released. In this case, 16.8M, yet 32.7M traded hands meaning initial holders let them go and some traded hands multiple times to retail investors.

This typically signals day trading and not accumulation, although a few hours data is insufficient to determine.

That Weibo was owned by SINA and that the popular Alibaba bought 18% of the shares last year and will increase the holdings garnered some attention. Alibaba plans to go public in the next week or so, near an issue similar in size to Facebook.

The concerns of any platform such as this is how many users there actively are. China has room to grow..but...

It is estimated that only about 5% of users account for up to 90% of content. Concern remains over Censorship in China and users dropped off when China warned about content and consequences. Also the ad count went up to a rate that "put off" some people interviewed before the IPO.

Finally, there is competition. Not from Twitter, which is banned in China, but from other companies such as WeChat which claims to be more private.

Short term down thumb to evaluate this IPO, which may get a burst if Alibaba IPO's and does well. In the short run, however, I'm anti-anything that limits you to 140 characters as you can tell from my pitches.

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Member Avatar ayekappy (< 20) Submitted: 4/17/2014 1:39:00 PM : Outperform Start Price: $20.79 WB Score: -2.44

Undervalued.

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