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Can chat-app Line attract American users with a US IPO?

A Thai teenager uses the "Line" instant messaging app on her smartphone Tuesday, Aug. 13, 2013 in Bangkok, Thailand. Thai police have asked the operator of the popular "Line" app for access to records of online chats, raising concerns about intrusive surveillance despite promising only suspected criminals would be targeted.
AP Photo/Sakchai Lalit
The app is leveraging kawaii.
  • Tim Fernholz
By Tim Fernholz

Senior reporter

Published Last updated This article is more than 2 years old.

This item has been corrected.

Can a foreign IPO expand a company’s market share?

That’s one consideration for the Korean-by-way-of-Japan smartphone social messaging app Line as it mulls a $28 billion IPO in either Japan or the US.

The company reports some 200 million registered users, although that’s still small compared to monthly active users reported US competitor WhatsApp (300 million) or China’s WeChat (235 million), and fellow IPO candidate Twitter (218.3 million). That raises questions about the company’s fairly ambitious valuation; the company saw revenues of $132 million in the second quarter of this year, which would suggest a stock trading at a much, much higher price-to-earnings ratio than its peers. No word yet on whether the company is profitable.

But at just over two years old, Line is a much younger company than its rivals. It only became an independent businesss in February and its growth has been rapid; its “stickers,” large, cute emoticons users attach to messages, have already been copied by Facebook. Messenger apps have also been supplanting social media in some parts of the world. In China, WeChat is starting overtake social media service Sina Weibo as users seek to control and target their online communications, while mobile chat apps are outstripping Twitter and Facebook for users in Japan and Korea.

One place Line has not taken off yet is the United States; less than 1% of smartphone users have downloaded it, compared to 9% for WhatsApp.

There’s a void in the market the company hopes it can fill, which may be one reason it’s thinking of raising capital in the US. It’s a strategy unlike that of Alibaba, the Chinese internet giant reportedly planning a US listing in search of laxer corporate governance rules, or Baidu, the Chinese search engine that followed excitement over Google’s IPO to go public in 2005. Line appears to be hoping that the media splash of listing on the NASDAQ might help attract more attention (and more US corporate partnerships) to win more active users.

Correction (Oct. 16): An earlier version of this article reported that Line has 73 million monthly active users; however, those are only monthly active users of its “timeline” feature. The company has not yet responded to a request for its total monthly active users.

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