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Tencent denies WeChat Singapore IPO as Sina wins more eyeballs for Weibo

Reuters / Carlos Barria
Battling for China's eyeballs.
  • Adam Pasick
By Adam Pasick

Senior Editor

Published This article is more than 2 years old.

The clash of the Chinese Internet titans got even more interesting on Tuesday, as Tencent denied a report it’s considering a Singapore IPO for its popular WeChat messaging app, and Sina fended off a WeChat onslaught to boost ad revenues and users for its Weibo microblog.

The immutable laws of corporate Internet rivalries dictate that companies must covet what they lack: Tencent has a booming mobile game business and a runaway hit with the voice and messaging app WeChat, also known as Weixin, which has more than 400 million users in China. What it needs is e-commerce and advertising revenues, currently the domain of Alibaba, which has the huge Taobao and Tmall online marketplaces, and its partially-owned ally Sina, which tripled its Weibo revenues to $30 million in the second quarter. Alibaba and Sina, in turn, lack the social and gaming chops of Tencent.

Expanding into a rival’s sweet spot while protecting your own turf from the same is an expensive proposition: Sina said Tuesday it had unexpectedly swung to a second quarter loss of $11.5 million from a profit of $33.2 million a year earlier, in part because of costs associated with Alibaba’s purchase of an 18% stake in the company. But in the all-important competition for users’ time and attention, daily active Weibo users rose 8.3% to 54 million, and time spent on the Weibo mobile app rose 14.5%. Investors saw more positives than negatives in the quarterly results, pushing the company’s New York-listed shares up 5.9% in after-hours trading.

Starting in the third quarter, Sina expects the Alibaba partnership to bring in significant advertising from online merchants; it certainly won’t hurt that Alibaba has banned merchants from using WeChat on its platform, and encouraged the use of Weibo.

Tencent on Tuesday disputed a report by the state-owned China Daily that it plans to spin off WeChat in a public offering in Singapore. The paper cited a source who said an “initial public offering of a spinoff on the same stock exchange with the holding company will raise more issues for Tencent”, and Singapore would be “an apparently easier choice.” A Tencent spokesman called the news “not true.”

Regardless of the truth of this particular rumor, don’t rule out a WeChat IPO. Tapping the markets for additional funds would help Tencent develop ways of monetizing its massive gaming and social audience—especially since Alibaba’s pockets are set to get a lot deeper later this year with a widely expected IPO of its own.

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