Weibo Corp (WB): How Will It Tackle The Rising WeChat?

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Weibo Corp (WB): How Will It Tackle The Rising WeChat?
By Julien GONG Min (http://www.flickr.com/photos/bfishadow/5963790078/) [CC BY 2.0], via Wikimedia Commons

Weibo Corp (ADR) (NASDAQ:WB) is facing a big challenge as Chinese users have begun to spend more time on the wildly popular messaging service WeChat. Weibo went public last month by raising $286 million. The microblogging site’s parent company Sina Corp (NASDAQ:SINA) has admitted that the time spent on Weibo has been declining due to fierce competition from WeChat.

Wang tries to convince that Weibo and WeChat are different

At the Global Mobile Internet Conference in Beijing, Weibo Corp (ADR) (NASDAQ:WB) CEO Gaofei Wang tried to create an optimistic picture about the company’s future. Wang said that Weibo and WeChat target different niches. While the microblogging company is a source of public information, WeChat is more like a communication tool to connect with people you already know. On Weibo, people can access all the information that interests them. Users won’t have to watch TV, read newspapers or access other channels, said Gaofei Wang. 

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That’s quite similar to what Twitter Inc (NYSE:TWTR) VP Shailesh Rao told The Next Web last month. He said the main difference between Twitter and messaging tools is that the microblogging site is public, helping you connect with anyone who shares your interest, not just friends and family. Weibo Corp (ADR) (NASDAQ:WB) has a user base of about 600 million, but it has a serious monetization problem. In 2013, the Chinese company generated a revenue of $188 million with a net loss of $30 million.

Weibo CEO avoids talking about censorship

Though Gaofei Wang painted a positive picture, he didn’t talk about censorship a big issue in China. Of course, he was speaking at a conference in Beijing. Talking about censorship there might land the company into deeper trouble than the censorship itself. Weibo Corp (ADR) (NASDAQ:WB) has a team of more than 150-employees monitoring 3 million posts every day.

The battle won’t be easy for Weibo Corp (ADR) (NASDAQ:WB) going forward. Wang acknowledged that WeChat and Weibo won’t only companies competing in Chinese social networking space. Other services may pop up to target other demands such as video and picture posts, just like Instagram. 

Weibo Corp (ADR) (NASDAQ:WB) shares were down 0.10% to $20.01 at 10:31 AM EDT on Monday.

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