TOKYO-Shares of Japanese messaging-app operator Line Corp. surged 32% on the first day of trading in Tokyo after a 27% first-day rise in New York Thursday, a strong showing in an otherwise lackluster initial public offering market.
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For the Tokyo based company, a decision to debut in NY is considered to be a sign that it is determined to face its global peers with an intention to extend outside Japan and Southeast Asia. Tencent Holdings Ltd’s WeChat, which dominates in China, has 697 million. It’s growing in the Middle East but isn’t catching on in the USA or Europe amid competition from Snapchat, Facebook messenger and other social media. “Fighting in the same digital arena as them is extremely important for us”. Stocks closed at $26.61, however. Shares surged 40 percent in opening trade in NY on Thursday evening, Tokyo time.
“That was a very smooth start”, said Hiroyuki Fukunaga, chief executive of financial adviser Investrust.
Tokyo’s influential day traders will be watching Line’s performance at Friday’s debut in its home market, and could spark an early feeding frenzy for the shares.
Line started in the wake of Japan’s 2011 quake and tsunami, as a way for people to communicate. After trading closed on Thursday, Naver’s ownership dropped to 80.8 percent.
Line Corp. President and CEO Takeshi Idezawa speaks during a press conference in Tokyo, Friday, July 15, 2016. A unique feature of Line is its “stickers”.
Line entered India about three years ago but trails Facebook-owned WhatsApp and Hike, backed by Bharti Enterprises and Japan’s SoftBank Group Corp, by number of users. The illustrated stickers often portray characters in anime, games, or other media, and is a key revenue source for the app.
Japan and Thailand are especially ripe for increasing ad-based revenue due to their relatively low rate of digital advertising, Idezawa said.
Line is the most popular messaging app in Japan, Thailand and Taiwan.
A fund manager at a Japanese asset management firm said, “Considering that Line is little known in the United States, the IPO seems to be a success”. But the company isn’t well-known outside its key Asia markets.
It is also popular in Indonesia and Myanmar, it said.
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Last year, Line posted revenue of 120 billion yen, up 40 per cent from the year before, but booked an overall loss, which it blamed on rising staff costs and other expenses.
