Bottom line: Weibo and its stock could remain under pressure for some time to come, potentially a long time if its new Oasis platform doesn’t provide the kind of relief that it is hoping for.
With corporate earnings in the spotlight, I’ve decided to zoom in this week on the Twitter-like Weibo (Nasdaq: WB), following the release of its quarterly results a week ago. As a long-time China tech watcher, I particularly like Weibo for its ability to reinvent itself, and like to think of it as “The little company that could, then couldn’t, then could again, then couldn’t” and so on.
Hopefully I’m not dating myself with that reference to the American childhood classic “The Little Engine That Could,” about a train that overcomes various obstacles to show the world its true abilities. But the bottom line is that Weibo has reinvented itself at least once in its brief lifetime that began with a bang a decade ago. It’s currently trying to do that again with a new soon-to-launch product called Oasis, which I’ll examine more closely in the second half of this column. Read Full Post…
Bottom line: Twitter’s conservative approach to China reflects a broader indecision at the company that is limiting its growth potential.
While social networking giant Facebook (Nasdaq: FB) actively flirts with China in a bid to enter the world’s largest Internet market, the smaller, struggling Twitter (NYSE: TWTR) seems unable to make up its mind. That seems to be the key takeaway from a new interview on the prickly subject of China between Maya Hari, Twitter’s Asia Pacific chief, and Caixin, a well-respected Chinese financial media that also happens to be my current employer.
This particular message seems to be a recurrent theme with Twitter, which, like Facebook, doesn’t like China’s strict self-censorship policies but also finds it hard to ignore such a big market. In Facebook’s case, the company has made it quite clear it’s willing to tolerate China’s self-censorship policies for a chance to build a presence in the market, most likely through a future joint venture with a local partner. Read Full Post…
Bottom line: Big drops for three China concept stocks recently listed in New York, combined with a pullback for social networking giant Weibo, indicate a recent round of China stock euphoria may have crested.
Wednesday could go down as a watershed for newly listed China stocks in New York, which posted one of their worst days since a new wave of IPO euphoria began about a month ago. Three of the largest new offerings in New York, online microlender Qudian (NYSE: QD), e-commerce firm Secoo (Nasdaq: SECO) and education firm Rise (Nasdaq: REDU) all fell by 7 percent or more in the latest session.
At the same time, the more stately but still new-ish Weibo (Nasdaq: WB) also dropped by nearly 6 percent after the company announced plans for a $700 million convertible bond and gave some preliminary third-quarter results that clearly didn’t get people too excited. It’s hard to say if there was a single catalyst for this sell-off, which didn’t really go too far beyond these new listing candidates joined by Weibo. Read Full Post…
Bottom line: A periodic window of IPOs that opens every 2-3 years is taking shape, with fintechs and other new categories like online literature likely to do well, while older concepts like e-commerce could struggle for attention.
My long-predicted IPO floodgate has finally burst, with no less than four major offerings in the headlines as we go into the new week. The new offerings I’m referring to involve two in the US, one for fintech startup Ppdai and another that has been talked about forever for Sogou, the search engine backed by Internet superstar Tencent(HKEx: 700) and the less steller Sohu(Nasdaq: SOHU).
Meantime, one of the other IPOs also involves Tencent, with its China Reading online literature unit getting cleared by the Hong Kong stock exchange and set to file its prospectus. Last but not least is Bona Film, the formerly New York-listed company that has been cleared for a re-listing in China. Read Full Post…
Bottom line: A flurry of IPOs for offshore Chinese tech firms marks the start of an upcycle following a three year lull, with fintechs likely to be the top stars.
After a relatively boring first eight months of the year, the IPO market has suddenly come to life with a flurry of offerings that are turning in a mixed performance. E-commerce seems to be a bit passe, though you would never guess that based on the recent run-up in the stock of sector lead Alibaba’s(NYSE: BABA) stock. Meantime, a small-ish biotech offering has wowed investors, and the best looks set to come with a couple of fintech offerings this week and towards the middle of October.
This particular spurt looks at least partly tied to the Chinese National Day holiday that will see the entire country basically close for all of next week, prompting companies that have been waiting to list to speed up the process to finish beforehand. Last week we saw logistics specialist Best Inc (NYSE: BSTI) deliver an offering to tepid response, followed by a much better result for money-losing biotech start up Zai Lab (Nasdaq: ZLAB). The week ended with a fizzle for luxury e-commerce firm Secoo on the Nasdaq. This week before the holiday, we could see debuts for the year’s first $1 billion-plus offerings from fintech firm ZhongAn Insurance. That should be followed by another fintech mega-deal by Qudian in mid-October. Read Full Post…
Bottom line: Focus Media could make a bid for Sina’s core web portal assets within the next year, following their co-investment in a fashion public relations specialist.
It’s a relatively slow time during the final dog days of summer here in Beijing, so I thought I would zoom in on an interesting new investment in a company called Bazaar Energy, which bills itself as a “fashion public relations solutions provider.” But what’s most interesting about this investment isn’t the company receiving the money, but rather the pair of companies providing the funding.
In this case it’s the pair of leading web portal Sina(Nasdaq: SINA) and outdoor media firm Focus Media (Shenzhen: 002027) that are providing the money, which appears to be quite a modest sum. This particular pairing is interesting less for the target company, and more because it brings together a pair of investors that were once intending to merge. Much has happened since that merger plan fell apart, and this new pairing raises the slim but still interesting prospect that this pair of companies might attempt to relaunch that plan. Read Full Post…
Bottom line: JD.com is likely to pass Baidu this week and become China’s third most valuable internet company, while Weibo’s stock is likely to enter a period of correction while it awaits an official live broadcasting license.
The era of the Internet triumvirate of Baidu (Nasdaq: BIDU), Alibaba (NYSE: BABA) and Tencent (HKEx: 700), often called the BAT, is on the cusp of ending, as up-and-comer JD.com (Nasdaq: JD) looks set to pass Baidu in terms of market value. Meantime, I suspect the end of another era is coming for the soaring Weibo (Nasdaq: WB), which had some of the wind knocked out of its sails following some strict words from China’s heavy-handed regulator.
We’ll focus mostly on the Baidu/JD transition here, as that really does seem to mark a changing of the guard in China’s dynamic Internet sector. That move has seen Baidu experience a longer-term stagnation, as its core search business comes under assault from a few other newer players and it fails to find new revenue sources to offset the loss. On the other hand, JD.com seems unable to do any wrong these days, and is starting to resemble US titan Amazon (Nasdaq: AMZN) in the sense that people don’t really care whether it makes money. Read Full Post…
Bottom line: Stellar earnings by Weibo and new funding for services from Toutiao and YY reflect the rapid rise in live broadcasting and short videos, in the latest boom for China’s internet that will end with a bust in around 2 years.
A trio of stories in the headlines are nicely spotlighting the oh-so-typical Chinese pattern of industries that suddenly become hot, leading people to pump huge amounts of cash into them in a fight for market share. Internet watchers will probably guess that I’m talking about the recent crazes in live broadcasting and short videos , which have thrust three companies, YY (Nasdaq: YY), Toutiao and Weibo (Nasdaq: WB) all into the headlines.
Leading those headlines are the latest results from Weibo, whose profit has risen nearly 7-fold in its quarterly report, igniting a 25 percent rally for its already-inflated stock. The other two headlines have YY and Toutiao pumping big new funds into their live broadcasting and short video services, $70 million and $140 million to be exact, respectively. Read Full Post…
Bottom line: Weibo’s rise from the ashes is likely to be followed by a decline similar to the one after its initial rise, as the current boom in live broadcasting wanes or that part of its business gets stolen by a better product from rival Tencent.
A turbo-charged Weibo (Nasdaq: WB) is in a couple of headlines as the new week begins, led by a new partnership with Beijing’s powerful central media that looks eerily similar to one from about 5 years ago. At the same time, the company is also in headlines for passing its role model, U.S. social networking pioneer Twitter (Nasdaq: TWTR), in terms of market value, in a case of the offspring outrunning the parent.
The sub-story to all of this is the huge and sudden explosion of live streaming services in China, which has helped Weibo to rise from the ashes and suddenly become one of China’s hottest companies again. That same live streaming phenomenon is also helping to revive others, such as Momo (Nasdaq: MOMO), sometimes called China’s equivalent of U.S. hooking-up app Tinder. Read Full Post…
Bottom line: Weibo’s lessening dependence on Alibaba is making an acquisition of the former by the latter look less likely, and raises the possibility that Weibo could instead make a play for its parent, Sina.
I’ve been predicting for a while that e-commerce leader Alibaba (NYSE: BABA) would soon make a bid for Weibo (WB), often called the Twitter (Nasdaq: TWTR) of China, due to an increasingly cozy relationship between the two. But the latest results from Weibo could prompt me to revise my earlier prediction, with the revelation that Weibo actually appears to be weaning itself from its heavy dependence on Alibaba.
This story has a number of threads, underpinned by a landmark tie-up that saw Alibaba buy 18 percent of Weibo 3 years ago, and then later increase that to the current level of 30 percent. The idea was that Weibo, which was losing money at the time of the original tie-up, could milk Alibaba’s connections with thousands of online merchants to find new business opportunities. Such a development did indeed occur, and last year business from Alibaba accounted for a whopping 30 percent of Weibo’s total. Read Full Post…
The following press releases and news reports about China companies were carried on October 15-17. To view a full article or story, click on the link next to the headline.
ChemChina, Sinochem in Talks on Possible $100 Bln Merger: Sources (English article)
Tencent (HKEx: 700) to Sign $3.5 Bln Loan to Finance Supercell Purchase (Chinese article)
Weibo (Nasdaq: WB) Has Nearly Eclipsed Twitter (NYSE: TWTR) by Market Value (English article)
Smartisan Denies Rumors to be Aquired by NetEase (Nasdaq: NTES) (Chinese article)
Tongcheng Eyes IPO in 3 Years After Merger with Wanda Travel (Chinese article)