Sina Plans for $500 Million Weibo IPO

Sina Corp. has hired Credit Suisse AG and Goldman Sachs Group Inc. for a second quarter US initial public offering (IPO) for Weibo, Sina’s Twitter-like microblogging service. According to the Wall Street Journal, the company hopes to raise $500 million on the offering, based on a valuation of $7 – $8 billion. However, analysts at Barclays and JP Morgan have valued the company at $5.8 billion and $5 billion, respectively.

Weibo’s valuation has grown steadily since April 2013, when Alibaba Group Holding Ltd., purchased an 18 percent stake in the company for $586 million. The Wall Street Journal reports that Alibaba may increase its stake in Weibo to 30 percent if the IPO takes place.

News of the Weibo IPO came on the same day that Sina reported the division had achieved its first operating profit ever in the fourth quarter of 2013. The operating profit of $3 million came after 2013 fourth-quarter advertising revenue surged 163 percent to $56 million.

Sina’s CEO, Charles Chao, said he hopes Weibo’s profits will continue to rise even though the number of microbloggers using the site is steadily falling—from 308.6 million in 2012 to 280.2 million in 2013. Analysts attribute much of that fall to changing mobile messaging habits and a Chinese government crackdown on online speech.