What to Know About This Year's Biggest-Yet Tech IPO

by Abel Hampton July 16, 2016, 13:55

Shares of Japanese mobile messaging app Line Corp. were up almost 30 percent Thursday from their initial public offering price on the New York Stock Exchange, the best Wall Street debut for a technology company this year.

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. The stock opened at $42 a share and had been priced at $32.84. Line will likely be measured going forward against fellow tech stocks Facebook and Twitter, for which user growth has been a key metric.

Line sold 35 million shares of stock, split between 22 million American depositary receipt shares listed on the New York Stock Exchange and 13 million shares on the Toyko Stock Exchange, the latter of which are set to trade Friday.

Executives rang the opening bell while standing next to a life-sized frowning brown bear and winking rabbit, paying homage to two of the many virtual stickers that drive more than $250 million a year in sales for the company. "The messaging service is just one dimension", Line Chief Globalization Officer Jungho Shin told Re/Code. That includes providing music streaming, payments, news and entertainment. But this year it's a hot commodity. At this point in 2015, 14 tech companies had gone public.

Line's sells thousands of the stickers, many of them animated and noisy, from Hello Kitty and Super Mario to Manga and Disney characters.

In the western market the app has competitors like Facebook Inc's Messenger and WhatsApp where as in China, it has to face competition from Tencent Holdings Ltd's WeChat.

Investors will be keen to look past the first few days of trading. And after a rapid early climb, monthly active user count has plateaued at about 218 million in recent quarters. It has also experimented with grocery delivery in Thailand and launched an Uber-like ride hailing service in Tokyo.

Founded in 2000, and with 2,537 employees now, LINE is on the cusp of exponential user growth with 250 million users globally, yet its latest net profit on an EPS basis was ($0.33) cents per share, despite climbing revenues which reached almost $1.25 billion for 2015 (after converting from JPY) as the company pursues expansion.

With such a successful debut in the Stock Exchange, though, it's clearly the next big messaging app to keep an eye on.

-CNNMoney's Paul LaMonica and Sophia Yan contributed reporting.

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