Weibo’s $50m wipeout: even Chinese social media struggles to make money

PUBLISHED: 3 HOURS 19 MINUTES AGO | UPDATE: 2 HOURS 30 MINUTES AGO

Weibo, which raised $US285.6 million in an IPO last month, operates a social media website similar to Twitter’s that allows users to post short messages. Twitter’s service is blocked by China’s government censors. Photo: Bloomberg

EDMOND LOCOCO

Weibo, the Chinese microblogging service controlled by Sina, has posted a quarterly loss that widened in its first financial results since an initial public offering last month.

Its first-quarter net loss was $US47.4 million ($51.33 million), compared with a loss of $US19.2 million a year earlier, the Beijing-based company said in a statement today. The loss matched the preliminary estimate of $US47.4 million provided in its listing prospectus.

Weibo, which also counts Alibaba Group among its backers, has had a 37 per cent surge in daily active users as China’s 618 million internet users migrate toward content on their smartphones and tablet computers. Weibo chief executive officer Wang Gaofei is investing in marketing and product development to attract new users and fend off competition from Tencent’s WeChat messaging application.

Yue Yao, an analyst with Morningstar, wrote in a May 11 report: “WeChat’s overwhelming popularity and heavy user traffic will significantly constrain the amount of time that mobile users spend on Weibo. This, in turn, will hamper Weibo’s business expansion over the long haul.”

Sales more than doubled to $US67.5 million from $US25.9 million a year earlier, the company said. That compared with the $US67.5 million preliminary estimate in its prospectus.

For the second quarter, Weibo expects net revenue of $US74 million to $US76 million, according to the filing.

Weibo, which raised $US285.6 million in an IPO last month, operates a social media website similar to Twitter’s that allows users to post short messages. Twitter’s service is blocked by China’s government censors.

The daily active users of Weibo rose to 66.6 million at the end of March, from 48.6 million a year earlier, the company said last month.

Sina remained the controlling shareholder of Weibo after the public offering, holding 59.8 per cent of outstanding ordinary shares representing 81.7 per cent of total voting power, said the prospectus released last month. Alibaba holds 32 per cent of the ordinary shares, the filing showed.

Sina reported a net loss of $33.2 million for the quarter ended March.

source:http://www.afr.com/p/technology/weibo_wipeout_even_chinese_social_lHKiZzX1igFuizaz2wWO9K