The End Of An Era: Can Sina Complete The Privatization Of Vertical Business Rise Again?

On March 23, Sina (NASDAQ: Sina), a US listed company, announced the completion of privatization, which also means that sina officially withdrew from the capital market stage nearly 21 years after its listing.

After the privatization, Cao Guowei, chairman of sina, also issued a letter to all members on March 23. He said, "yesterday was the last day that sina shares were publicly traded on NASDAQ in the United States. After 21 years of ups and downs, Sina delisted from Nasdaq and became a private enterprise jointly controlled by Sina management and me, and was renamed "Sina Group Holding Co., Ltd."

Cao Guowei said that the privatization of sina is to change the unreasonable capital structure formed for many years due to historical reasons, and Sina and Weibo are listed companies as both parent companies and subsidiaries. On the other hand, it also provides more flexibility for Sina group to develop more diversified in the future.

He stressed that Sina's privatization would not have any significant impact on its current business. After privatization, Sina group is still the controlling shareholder of microblog listed companies. The original Sina portal business with sina mobile as the main body will be more closely integrated with the microblog business, while some of the original Sina vertical businesses, such as Sina Finance, sina finance and sina sports, will develop more independently. At the same time, Sina group will increase investment in the future, accelerate the pace of merger and acquisition, and realize the diversified development of group business.

Privatization

On July 6, 2020, Sina received a non binding privatization offer from new wave mmxv limited, which proposed to purchase all the outstanding common shares of the company not yet held by new wave at a cash price of $41 per share.

New wave is a company registered in the British Virgin Islands and controlled by Sina chairman and CEO Cao Guowei. As of the end of March 2020, new wave held about 7.94 million ordinary shares of sina, accounting for 12.2%, and 7150 a-preferred shares with a total voting right of 58%. In addition to holding Sina shares through new wave, Cao Guowei also holds 874000 ordinary shares of sina. Therefore, Cao Guowei holds 13.5% of sina's shares and 58.6% of voting rights.

On September 28, 2020, according to the agreement signed by all parties, the privatization price of sina was increased to 43.3 US dollars, 5.6% higher than the previous 41 US dollars, and the corresponding equity value of sina was about 2.59 billion US dollars. As of March 22, the U.S. stock closed at $43.26 per share, with a market value of $2.584 billion.

In the whole process of sina's privatization, Cao Guowei is undoubtedly the most important promoter. Although he is not the founder of sina, he is a key figure in the history of sina's development.

Sina was officially founded in December 1998. If we want to go back further, the time when Sina's predecessor, Sitong Lifang, was founded in December 1993. Sina was listed on NASDAQ in April 2000. According to the industry, sina is the first Chinese Internet company to go public in the United States. In particular, the vie structure that it has explored also provides a model for Chinese companies to follow.

However, in the second year after the company went public, Wang Zhidong, the founder of sina, was forced to leave Sina. Subsequently, the head of sina changed several times. Until Cao Guowei became the chairman and CEO of sina in August 2012, Sina's No. 1 figure was really stable. Cao Guowei joined Sina in September 1999 and successively served as vice president in charge of finance, chief financial officer, chief operating officer, President and CEO.

With the turbulence of management, Sina's business development in the first ten years of listing was not smooth. If it wasn't for Cao Guowei's leadership, Sina launched its microblog in August 2009, and successfully seized the track of social media, today's Sina might be another version of the story.

New starting point

Sina has three main products, namely, sina.com, Sina mobile (mobile portal and mobile application) and social media microblog. Among them, sina.com is the product that sina had at the beginning of its establishment, and it is also the main business of sina listing. Sina mobile is the embodiment of sina in the mobile terminal. Only Weibo is a new product that sina has innovated and launched in the development of more than 20 years.

According to the financial report, Sina's revenue in 2019 is $2.16 billion, of which advertising revenue is $1.74 billion, accounting for more than 80%. By business, microblogging accounts for 80% of revenue, with the remaining 20% coming from portal advertising and fintech.

It can be seen that Sina's revenue is excessively dependent on microblog, and its structure is single, mainly relying on advertising business. As of March 22, the U.S. stock market closed at $52.46 per share, with a market value of $11.88 billion, which is 4.6 times the market value of sina before delisting.

But for Weibo, it is also facing the worry of growth. According to the latest financial report of microblog, in 2020, the revenue of microblog will be 1.69 billion US dollars, down 4% year on year, and the net profit will be 313 million US dollars, with a year-on-year decrease of 36.6%. Among them, the core advertising and marketing revenue of microblog was 1.49 billion US dollars, down 3% year-on-year.

At the user level, by the end of 2020, the number of monthly live users of microblog was 521 million, although the net increase was about 5 million compared with the same period of last year, and also increased compared with the third quarter, but compared with the data at the end of the first quarter of 2020, the number of monthly live users decreased by nearly 30 million.

However, if we look at the performance of the fourth quarter of 2020, the revenue of microblog is 513 million US dollars, an increase of 10% over the same period of last year. Under the non US general accounting standards, the net profit attributable to microblog is 213 million US dollars, which is higher than the market expectation.

Weibo said that in the fourth quarter of last year, the company made more efforts in user acquisition and user retention, so we can see that the number of users has improved. For 2021, CEO Wang Gaofei said that in 2021, microblog will fully grasp the opportunity of accelerating the online marketing of the market, and obtain incremental advertising budget through differentiated social advertising products and continuously optimized advertising bidding system.

Looking forward to the future of sina, the new growth point may be vertical businesses such as Sina Finance, sina finance and sina sports. After all, it has been reported in the industry that sina finance and economics has been listed independently for a long time, and the delisting of sina can really promote the development of these vertical businesses more independently. Cao Guowei also said: "Sina's privatization is not the end of an era, but we use a new framework to better explore the future."

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