Is Twitter's IPO Alibaba's cue?
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Some analysts hope Twitter's IPO on Friday could act as a boost to many Chinese companies which plan to sell their shares in US stock markets. Bai Jie / for China Daily |
Twitter's shares nearly doubled in its public trading debut on Thursday, making it the second-largest internet IPO in the US since Facebook's $16 billion offering 18 months ago.
Shares of Twitter, which rose as much as 92 percent in their first day of trade on the New York Stock Exchange, closed at $44.90, a 73 percent gain above the opening $26 IPO price.
Listing under the symbol TWTR, the strong debut has driven the San Francisco-based micro blogging network's value to more than $25 billion.
The seven-year-old company now has 230 million users globally. However, like Facebook and Google, Twitter doesn't have a presence in China, the world's biggest Internet market with 538 million Internet users.
The US IPO market is having its busiest year since 2007. According to the Wall Street Journal, through August, 134 companies had gone public in the US, up 37 percent from the same point in 2012.
IPO research firm Renaissance Capital estimated more than 200 IPOs in the US by the end of this year, a healthy level last seen in 2007.
The number of Chinese IPOs in the US has fallen from 41 in 2010 to 12 in 2011. Only four Chinese companies have listed on US stock markets since 2012, including social communications service YY Inc.
But Chinese companies that would list in the US are gradually coming back after a cooling off period in the past three years due to accounting scandals. Five Chinese companies have completed US IPOs this year, including the two most recent - online classified site 58.com and online travel company Qunar.
Now with Twitter's impressive debut, many analysts believe it could drive a possible IPO wave from Chinese tech firms.
"I think Twitter's successful IPO will definitely help the overall market, including Chinese IPOs in addition to 58 and Qunar," said Eugene Zhang, president of InnoSpring, the first US-Chinese technology incubator in Silicon Valley
"The pace will accelerate," Zhang added.
Jack Jia, founder and chairman of Baynote, said it is more of a re-enforcement of big China tech IPOs that has already happened, citing Qunar as a good recent example.
Jia believes Twitter's IPO could serve as a barometer of investor appetite for technology shares and be watched by Chinese tech companies such as China's Twitter-like micro-blogging platform Sina Weibo, which is expected to go public in the near future.
"Twitter's IPO paced road for a successful spinoff/IPO of Weibo from Sina that has been in the works for a while," Jia said.
"China tech companies in the US public market has been a cyclical love and lost relationship for over a decade," He said. "This time, it may be a marriage with prenup instead of that young and crazy China love or that I-hate-you China ice age. Then again, investors tend to have short memory of the past."
Another Chinese tech company that is likely to pay close attention to Twitter's IPO performance would be Alibaba, China's largest e-commerce company.
The Hangzhou-based e-commerce giant is reportedly set to launch an IPO in the coming months and raise $15 billion at a more than $100 billion valuation. After it failed to convince Hong Kong regulators to allow dual class listings, the prospects for listing on a US exchange have increased.
"Hong Kong Exchange and Clearing is a good place for consumer goods that target Asia. But I am not sure if it has enough globally oriented investors to stomach the size of Alibaba," Jia said. "So rationally speaking, Alibaba should come to the US and the US should welcome Ali wholeheartedly."
