Line prepares to hit stock exchanges after its $1.1-billion IPO
Investors looking to capitalize on the mobile messaging craze, get in line.
The Japanese messaging app firm Line Corp. is set to begin trading on the New York Stock Exchange on Thursday and in Tokyo on Friday. Though little known in the U.S., Line has enjoyed a quick surge to popularity in Japan, filling an important communications hole after a devastating earthquake and tsunami in 2011 damaged phone infrastructure. In its home country, Line has more users than Facebook or Twitter.
Even if you haven’t heard of Line Corp., there’s no need to look further than your own smartphone to gauge the importance of mobile messaging. Chances are, you’re among the 900 million users of Facebook Messenger, or the billion-plus users of WhatsApp. You might also have Snapchat, WeChat, Viber or Kakao Talk.
In an age when people are glued to smartphones around the clock and increasingly shun traditional phone conversations, chat is king. Companies are angling to get in on the messaging craze with automated “chat bots” offering to book plane tickets, shop for tennis shoes or send the day’s weather report.
Since its introduction five years ago, Line has surged to 218 million active users, even though it’s available in only a handful of countries. Line’s members use the app not just for messaging but also to send one another cute cartoon “stamps” (think intricate emoji) or search for jobs or music. It also offers free voice calls and has been focusing on expanding to markets such as Thailand, Taiwan and Indonesia.
Although Line is available in the United States, it’s not yet clear how well the app might do in Western markets, where Facebook Inc.’s Messenger and WhatsApp are among the most popular messaging options. In addition, Apple Inc. and Google, owned by Alphabet Inc., are working on sprucing up their own messaging offerings.
Based on this week’s offering, though, there’s strong investor demand for Line. On Monday, Line’s initial public offering raised more than $1.1 billion, making it the biggest IPO in the U.S. so far this year, according to IPO research firm Renaissance Capital. Shares priced at 3,300 yen each, or $32.84 per U.S.-traded share, the top of the predicted range. That suggests strong demand. The offering values Line at nearly $7 billion.
Line has its headquarters in Tokyo but is owned by Naver Corp., South Korea’s No. 1 search engine. Line’s stock debut in Tokyo and New York is a milestone event for a Korean Internet industry that has typically seen little success outside the country, apart from some online games.
In South Korea, though, Line lags far behind Kakao Talk, which had a year’s head start. With Kakao already popular, Naver turned its efforts instead to Japan, where no dominant messenger app was present at the time. It grew Line into an international service, while Kakao remained largely a Korean one.
Even in China, where Line is blocked along with Kakao, Line is well known for its cute animal characters, such as a bear named Brown and a chick named Sally. Those mascots started initially as “stamps” that users send to express their emotion or to replace text. They have turned into merchandised items sold at Line Friend Stores in some Asian countries including China. In Seoul, Chinese tourists flock to Line shops and queue up to snap up Brown dolls and Sally cups.
Naver still owns a majority stake in Line after the IPO. Co-founder Lee Hae Jin, 48, is one of the wealthiest individuals in South Korea. Speaking to reporters after a forum in 2014, Lee said he was “seriously truly worried” whether Naver could win the competition with American or Chinese companies.
This week’s IPO shows it at least has a fighting chance.
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