Bill Gates uses the site to talk about public policy issues to his more than 3 million followers. Tom Cruise uses the service to promote his latest films and press appearances to more than 5 million followers. Prominent politicians like David Cameron and Shimon Peres are on it talking about their travels, though with significantly smaller followings.
No, it's not Twitter, but rather Weibo, a Chinese social network whose name literally translates to 'microblog.' In 2009, three years after Twitter launched in the U.S., one of China's largest web portals called Sina launched Weibo to break into China's microblogging space. Weibo quickly signed up tens of millions of users and emerged as the most popular microblogging service in the country.
For those living in China, Weibo serves as a place to engage with brands and celebrities (sound familiar?) and, at least initially, to share pieces of news not censored by the government. In the U.S., however, Weibo rarely makes headlines. That may change soon.
Weibo filed to go public in the U.S. last month and is expected to begin trading on the Nasdaq on Thursday under the ticker 'WB.' The company has said it will price its shares between $17-$19, potentially raising as much as $380 million from the public offering with a valuation just shy of $4 billion. That would make Weibo one of the larger tech IPOs of the year to date, but it is a far cry Twitter's.
The little bird has a much bigger valuation
Twitter raised $1.82 billion from its IPO, valuing it at just more than $14 billion. Twitter's stock shot up by more than 70% on its first day of trading, giving the social network a hefty market cap of around $25 billion.
Weibo had reportedly been looking for a valuation in the $7 billion-$8 billion range, but fell short in part because the market is a little less frothy now than it was six months ago when Twitter went public.
Weibo's user base vs. Twitter's user base
As with Twitter, there are also concerns that Weibo may struggle to keep up user growth. Weibo had 143.8 million monthly active users in the March quarter and 66.6 million daily active users, compared to 107.3 million and 48.6 million, respectively, a year earlier.
'We anticipate that our user growth rate will slow over time as the size of our user base increases,' according to Weibo's filing with the SEC. 'To the extent our user growth rate slows, our success will become increasingly dependent on our ability to increase user engagement.'
Twitter had 241 million monthly active users in the December quarter and 100 million daily active users as of October.
Not as strong with mobile or monetization (yet)One of Twitter's strengths has been that it was built for mobile first, unlike Facebook, and was therefore well-positioned for the mobile era. For Weibo, on the other hand, mobile is a bit more of a concern.
Yue Yao, an analyst with Morningstar, wrote in a recent report that Weibo is struggling to compete with WeChat, a popular mobile messaging app in China, in the mobile space. 'As user engagement of social networking services in China rapidly shifts to mobile devices from PCs, we have continuously witnessed the usage of Sina Weibo on mobile devices being constrained by Tencent's WeChat,' Yao wrote. 'We have also identified a weaker monetization engine for Weibo's business at the mobile end due to the limited display ad space on mobile devices.'
Weibo began monetizing in 2012 with 'social display ads' and generated revenue of just more than $188 million in 2013, with a net loss of $38.1 million. Twitter generated $665 million in revenue last year, though it also posted significantly higher losses for the year.
The more telling stat may be the revenue per user: Bloomberg calculates that Weibo pulled in $1.46 per user as of the end of 2013 while Twitter pulled in $2.76.
The caged bird may not sing
Perhaps the most striking different between Twitter and Weibo - and also one of Weibo's chief business risks - is censorship.
Twitter has a reputation for pushing back against governments and fighting for greater transparency. But Weibo operates in a country with a government that can crack down on Internet companies for showing content that, in Weibo's words, 'impairs the national dignity of China, is reactionary, obscene, superstitious, fraudulent or defamatory...' Many users have reportedly already shifted away from the service as it has cracked down on free speech.
If Weibo doesn't comply with the government, it could be held liable for the information that is shared and risks having some of its licenses to operate revoked. If Weibo does comply with the government, it risks losing its users. Weibo lays out the latter concern best in the Risk Factors section of its IPO filing.
'Although our active user base has increased over the past several years, regulation and censorship of information disseminated over the internet in China may adversely affect our user experience and reduce users' engagement and activities on our platform as well as adversely affect our ability to attract new users to our platform,' the filing says. 'Any and all of these adverse impacts may ultimately materially and adversely affect our business and results of operations.'
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