Sina officially announced the completion of the privatization and delisting from the NASDAQ. After that, the company will be renamed “Sina Group Holding Co., Ltd.”
“Taking Sina private is not the end of an era, but a new structure to better shape the future,” Charles Chao, Sina’s chairman, wrote in an internal letter to employees ahead of the official delisting. In terms of business, after privatization, the original Sina portal business with Sina Mobile as the main body will be more closely integrated with Weibo business.
On Nasdaq, Sina has fallen out of favor with capital. On the last day of trading on March 22, Sina closed at $43.26 per share, with a market capitalization of $2.585 billion, on low volume. In 2017, Sina had a market capitalization of more than $8.7 billion.
As the earliest Chinese Internet enterprise to be listed on the Nasdaq, Sina’s VIE structure has been used for reference by many subsequent Internet companies, and Weibo also pioneered the listing of social media in China. However, with the return of netease to Hong Kong and the delisting of Sina, the era of Internet portal also went into decline.
Is Weibo the only bright spot for Sina?
The official announcement of the delisting means that Sina’s more than eight – month – long privatization process is finally complete. On July 6, 2020, Sina Corporation announced that its Board of Directors had received a non-binding privatization offer from “New Wave”, Inc. to acquire all of Sina’s outstanding common shares at a price of $41 per share. Then, on Sept. 28 last year, the transaction price was finally set at $43.3 per share, an 8% premium to the share price at the time, valuing Sina at $2.59 billion.
Prior to the privatization, Sina Chairman Charles Chao held a 12.2 percent stake and 58 percent voting rights through New Wave, according to disclosures in Sina’s 2019 financial report. After the privatization, Sina will become a private company controlled jointly by current Chairman Charles Chao and Sina’s management.
Chao stressed in his internal letter that “the delisting will not have any material impact on the business” and that Sina remains a major shareholder in sina weibo. In addition, regarding the future business direction of Sina, in the internal letter, Chao revealed that Sina Finance, Sina Finance and Sina Sports and other vertical businesses will be more independent development. At the same time, Sina will increase investment, accelerate the pace of mergers and acquisitions, to achieve business diversification.
In fact, before the delisting, Weibo had become Sina’s “most valuable” asset. Weibo’s market capitalization was $11.88 billion as of March 22, compared with Sina’s $2.585 billion. Sina owns 46 percent of Weibo’s shares and 72 percent of its voting rights.
Sina said part of the reason for the delisting was to end the unreasonable phenomenon of Weibo listing at the same time as parent Sina. But even so, Sina’s transition from a public company to a private one lies in the fact that its business is no longer visibly growing.
Sina’s second-quarter report of 2020 showed that Sina’s current quarterly revenue was $510 million, down 5% year on year. In terms of profit, Sina swung to a net loss of $25.4 million in the second quarter of 2020, compared with a net profit of $51.4 million in the same period last year.
Weibo accounts for 76 per cent of Sina’s revenue structure, while 14 per cent of its traditional business comes from fintech and only 10 per cent from media advertising such as traditional portals.
The age of the Internet portal is gone
Sina, a web portal now increasingly forgotten by a new generation of Internet users, was the first Chinese Internet company to list on Nasdaq. In April 2000, Sina landed on NASDAQ, went public on netease in June and sohu in July.
Among them, Sina was once considered to be one of the earliest Internet companies to accept venture capital in China, and its pioneering VIE structure was also widely adopted by technology companies in the future. Tencent, Ali, Baidu, sohu, etc., also used this structure to go public in the United States.
But as the dotcom bubble burst in 2001, Sina’s share price fell as low as $1.02, even below the average cost to shareholders, and Wang Zhidong, Sina’s former chairman, was forced out in 2001. Then in 2012, with the rise of sina weibo, Chao gradually became the core of Sina’s management.
At the close of U.S. trading on March 22, sohu had a market capitalization of $665 million, just a quarter of Sina’s value at the same time. In the outside world, Sina can get a higher valuation than sohu because of the support of Weibo. But now, sina withdraw market, netease return Hong Kong to be listed, all show, at the outset sina opens up the portal website era is gradually far away.
After the privatization, the outside world is still expected to return to the A-share or Hong Kong stock listing, Sina management has not yet released A firm message. But in any case, Sina needs to tell a new story to the capital markets, changing the reality that its portals are in decline and Weibo is the only “trump card” in its hands.