Tech Initial Public Offerings are a tricky endeavor, especially lately. They are so difficult that, in 2016, there have only been 5 tech IPOs. The latest is another messaging app, and one you have likely not encountered unless you are communicating often with Asia. The company and messaging product are called Line, and they work just like products like WhatsApp.
Let's start with the IPO. The company, which is a Japanese subsidiary of the South Korean company Naver, offered stock on two exchanges: 22 million shares on the NYSE and 13 million on Tokyo's stock exchange. The stocks opened the day at $42 per share, netting the company about $1.25 billion for Line. Prices rose just about $2.50 per share during the day, and then tumbled, closing at $26.61 per share. At its height, the company was valued at $9.3 billion.
Comparatively, Facebook spent $16 billion for WhatsApp, a nearly identical product that duplicates many of the features of Facebook's own messaging app. Despite the repetition to their existing offerings, Facebook still paid nearly double the valuation that Line received during their IPO.
Speaking of Facebook, their IPO went similarly, opening at $42 and closing at $38.37. They raised $16 billion, however, as they offered many more shares at that price. Twitter ended up with a valuation of $31 billion after their IPO. Despite offering less stock and ending up with a far lower valuation that Facebook or Twitter, and a smaller valuation than rival WhatsApp was sold for, Line still managed to take the top spot as most successful IPO of the year, a mantle that clearly has little value.
Is this IPO an indication that tech companies are no longer worth what they once were to investor? Or are messaging apps simply worth more to investors than other tech companies? Let us know your thoughts in the comments.read more...