Weibo had a reduced offering size and is seen as a big test for Chinese companies ahead of the eagerly anticipated Alibaba listing. The $17-a-share was at the bottom of the projected price range of $17 to $19. The company ended up selling 16.8 million shares, fewer than the 20 million they expected to sell.
The IPO comes amid weakness in the U.S. and Chinese economies, with other IPOs like that of Twitter not doing as well as expected. Twitter's share price has dropped 18 percent since the beginning of March.
Weibo has grown to 144 million daily visitors since its inception in 2009 and comes closest to a public forum in a media and Internet market controlled by Chinese censorship. This censorship, which has become stricter, saw almost 28 million people leave the service, according to the China Internet Network Information Center.
The are a number os reasons for this lukewarm response. Some suspect Weibo, which means micro-blogging in Chinese, could be acquired by Alibaba The other reason, which the company warns about in its SEC filing, is Chinese censorship that could affect its business operations.
“In addition, the MIIT [Ministry of Industry and Information Technology] has published regulations that subject website operators to potential liability for content displayed on their websites and for the actions of users and others using their systems, including liability for violations of PRC laws prohibiting the dissemination of content deemed to be socially destabilizing,” the SEC filing reads.
U.S. researchers believe that these regulations, which require content to be screened and deleted if considered offensive, would mean Weibo will need 4,200 censors. A Harvard team speculates the number of censors required cold be much higher -- in the range of 50,000 to 75,000.
But Weibo goes on to explain that the loss is not related to the cost of investing in these censors but that such measures severely affect the popularity of the service.
[Securities and Exchanges Commission]