Sina Weibo valuation compared to Twitter data

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Small white vegetables (micro-letter id:xiaobaibucai521)

A big boot landed. Sina Weibo, which is rumoured to be on the market, has finally submitted a prospectus, which plans to raise $500 million trillion in the US.

Since starting in August 2009, Sina Weibo has been closely watched at home and abroad, in contrast to Twitter, the world's largest social media. Following the launch of Twitter last November, Weibo's IPO has become a hot topic in the industry.

Twitter has been on the market for 8 years and Sina Weibo is less than 5 years old. Twitter and Weibo have a similar track in social media for micro-blogging, and have opted for the same underwriter Goldman Sachs on the market.

The biggest concern for Weibo's IPO is the same as Twitter: whether Weibo can sustain user growth and ad revenue growth. The amount of data disclosed in the microblog prospectus, and the contrast to Twitter's pre-IPO situation, makes it clear that the country's biggest social media still maintains healthy and stable growth, as well as a huge space for valuations.

As we all know, user size and activity are the most important indicators of social media.

In the IPO document, Sina Weibo, which has been developing for 4 years, was 129 million active in the end of 2013, up 33% from a year earlier, almost in line with the 2012 growth. And Twitter has been on the market for 8 years, the monthly active users of 232 million, year-on-year increase of about 30%.

Although the Chinese Internet Information Center (CNNIC) reported the first sharp decline in Chinese microblog users last year, the data on Sina Weibo's IPO file were reversed, and active users continued to grow. If all two are true, the comparison of this indicator data actually shows that Sina Weibo has become a solo group of Chinese social media, and other microblogs are showing a marked decline.

700,000 authenticated users, 400,000 enterprise users and 80,000 government users, Sina Weibo has been closely linked to the whole society of China. While micro-credit has diverted some of the needs of social users, Sina Weibo Weibo is a unique platform for China's "news attributes" of social media. Every time a social hot spot happens, Sina Weibo will usher in a more robust user and content boom – a stark contrast to the micro-credit "massacre" event.

So what's the future?

We all know that the Pleaes line of Urban micro-blog has been widely used, in future growth, Sina Weibo's huge growth space can only be continued to sink.

With the growing saturation of Weibo users in big coastal cities, three or four-line cities and villages with a huge population will be the main source of growth for users of Weibo in the future. These towns and rural users will be using the smartphone primarily to log on to the microblogging service compared to the big city users.

Revenue capacity is also the most concerned issue for investors.

In this regard, Weibo's financial health is even higher than Twitter's. Weibo achieved revenue of 188 million U.S. dollars in 2013, an increase of 185% per cent, and a net loss narrowed sharply from 102 million to $38.1 million, which had been profitable in the fourth quarter of last year.

Twitter, which had a total revenue of $660 million last year (according to earnings after the IPO), grew more than one times, but the net loss was as high as $510 million. Of course, Twitter's huge losses are a factor of acquisitions and increased investment, but Weibo's financial health is no doubt.

In addition, Twitter has 87% of its revenue from advertising, compared with 78% of Weibo, with a more diversified revenue structure.

On the other level, Twitter has been commercialized for four years, while Weibo is less than two years old. Although the road to commercialization is not long, Weibo's revenue growth is very eye-catching; with the gradual advance of micro-broad data strategy, accurate data will bring more valuable advertising services in the future. It is worth mentioning that the cooperation with Ali has brought a stable advertising revenue, and the cooperation between the two sides is only just beginning.

Like Twitter, microblogs are inherently mobile. Weibo currently has more than 70% mobile users, almost as far as Twitter. But in mobile advertising, the commercialization of only two years of micro-blog has a huge growth space, mobile advertising accounted for only 28% of the revenue, far less than 75% of Twitter. However, China has become the world's largest smartphone market, and with the growing popularity of mobile internet in China, it is clear that Weibo's fledgling mobile ads will also grow strongly.

Comparing microblogging and Twitter-like data before the IPO, there is no doubt that Weibo's future valuations will grow in space. According to the microblogging and Ali cooperation agreement, Ali will be listed in the previous increase in micro-Bo shares to 30%, the two sides agreed to the micro-blog valuation of 5.5 billion U.S. dollars, this should be Weibo's latest reserve price, significantly beyond Ali last year when the shares of the microblog valuation (about 3.3 billion U.S. dollars).

Moreover, from the perspective of the ownership structure, Sina executives have repeatedly said that to maintain the control of micro-Bo, Sina's shares will be held after the IPO is bound to maintain around 50%, while Ali as the second largest shareholder holding 30% of the stake, the remaining 20% will include 10%~15% staff and management Holdings, So it is likely that Weibo's share offer will be lower than Twitter.

It is also worth mentioning that Goldman Sachs has extensive experience in the area of social networking sites, helping Twitter get a very successful IPO performance, with a 73% jump in the first day;

Let's wait and see.

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"Small white vegetables" micro-signal: xiaobaibucai521