Rumors emerged in the spring about a possible Sina Weibo public offering, and a spin-off has looked more likely since parent Sina registed an offshore entity for its microblogging business in June. With a recent white paper from Sina indicating that its registered users had increased nearly 300% since 2010, to 250 million, iChinastock assesses the site’s potential valuation:
In its most recent round of venture investment, Facebook was valued at around $70 billion. As Facebook does not disclose any data on revenue or profit, and Sina Weibo has not yet turned profitable, it is more suitable to estimate its value based on the number of users. According to the recent 3-month data from Alexa.com, time spent per user on Facebook is similar to that on Sina Weibo.
According to the official data, Facebook has over 800 million users. That translates into an ARPU of $87.5. By the second quarter of 2011, Sina Weibo had over 200 million users. Bookmarking to Facebook’s user value and cost of effectively acquiring clients among domestic e-commerce companies, we estimate that each user on Sina Weibo is worth 87.5 RMB.
The actual number of users on Sina Weibo is over 200 million and it is still growing. Due to the fact the monetization has not kicked in, however, we would multiply the above user value by 60%. That is, the estimated value of Sina Weibo is 87.5 X 200 million X 60% = 10.5 billion RMB. Considering its leading role in the industry and rapid growth, we add a 20% premium and reach a 12.6 billion RMB ($1.97 billion) estimated value.