Beijing: Sina Weibo, China's answer to Twitter, debuted on the Nasdaq exchange on Thursday with a 19.1 per cent jump despite an initial public offering (IPO) that went out undersubscribed and lower priced than hoped.
In a spate of buying that suggested that Wall Street's waters are still welcoming to loss-making technology high flyers, and to Chinese firms as well, Weibo shares rose from the subscription price of $17 to as high as $24.28, before settling the day at $20.24.
That is good news for Alibaba, the immensely profitable Chinese online commercial gateway that is preparing its initial public offering for the United States market later this year.
Weibo sought to raise $380 million by selling 20 million shares for as much as $19 each. But underwriters could only find demand for 16.8 million shares at the low end of the offer, $17, bringing the company $287 million.
Charles Chao, the chief executive of Chinese online power Sina, Weibo's parent, shrugged off the undersubscription, saying it was mainly important to achieve the listing and establish Weibo's separate identity.
"It's a tough market... The entire IPO market is rather soft," he said.
"To have a successful listing for us is probably the most important. We do not actually care too much about the temporary price for the stock," he said.
"If we can over the longer term keep executing our strategies and innovating in a very focused way, we can create shareholder value."
Social media service
Weibo, launched in August 2009, is China's largest social media service with 144 million active monthly users. It is most often compared to Twitter. But by allowing more content and functionality, it overlaps with Facebook as well. Twitter and Facebook are banned in China.
Weibo has yet to make a profit, losing $38 million last year on revenues of $188 million, and another $47 million in the first quarter of this year, though revenues jumped to nearly $68 million for the three months.