What's going on?
Line, the Asia-focused messaging app that is a comparatively small competitor to the likes of Whatsapp and WeChat, became a publicly traded company on Thursday – and its stock soared 30% on its first day of trading in New York!
What does this mean?
Line is like Whatsapp but with lots of in-app purchases available. The sale of virtual “stickers” and purchases associated with mobile games accounts for a huge chunk of its revenue. It has 218 million monthly active users (by contrast, Whatsapp has about 1 billion) with most of those coming from four Asian countries: Japan, Thailand, Taiwan and Indonesia. The initial public offering (a.k.a. the process of becoming a publicly traded company) valued Line at $6.6 billion – which makes it the largest tech IPO this year.
Why should I care?
For the stock: Investors are wondering how much of a threat Facebook poses to Line.
With 1.6 billion monthly active users and two of the world’s largest messaging apps (Messenger and Whatsapp), Facebook is the clear market leader in messaging (especially outside of WeChat-dominated China). One question for investors is whether or not Line will ultimately fall prey to a push by Facebook to grab and monetize more messaging users (especially in Line’s key markets).
The bigger picture: The IPO market is clearly open for tech companies.
Twilio, another tech company that recently became a public company, has seen its stock price triple since it first sold shares to investors – and that was less than a month ago! Line has also been well-received. That probably means investors are ready and willing to buy into more tech companies – and so the road to becoming a public company should be much more open now for tech firms than it was previously this year.