Update: The Sina spokesperson responsible for the original denial has retracted the statement: “What I meant to say is that I was not fully informed on the matter. Sina is a listed company and all financial information related to the company is disclosed.”
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Multiple stories had been in circulation for a few weeks now, suggesting that Alibaba would pick up between a 15 to 20 percent stake in the popular service for as much as $3 billion. The numbers of the rumor have differed wildly, with some claiming Alibaba was investing the full amount, while others pegged the overall valuation of Weibo at $3 billion. Frankly, a $3 billion investment for a 15-20 percent stake seems overvalued, since it would value Weibo, which has yet to prove it can make money, at over $15 billion.
We’ve been skeptical about the deal since we heard about it, and Sina has, at least for now, poured a dose of ice water on the rumor. Of course, this doesn’t preclude an investment from happening in the future, but it should calm down Sina’s stock price in the short term.
It wouldn’t be unheard of for Sina to partner up with one of its rivals, though. The company did, after all, reach a strategic agreement with search giant Baidu earlier this year.
Weibo has grown to a massive 400 million users, but it’s experiencing growing pains. Tencent’s WeChat messaging app is close in its rear-view mirror and is having a negative effect on user time spent on Weibo.
One bright spot for Weibo did come recently with an ecommerce experiment arranged by Xiaomi. The smartphone maker worked with Sina to sell a batch of Mi2 handsets on Weibo using the new WeiboPay payment service. The trial was a success, as all 50,000 units sold out in five minutes.
With Sina aiming to build a ecommerce platform on top of its microblogging service, it will encroach on Alibaba’s field of expertise. If, as Sina has suggested, the two don’t end up linking up, they’ll end up as direct competitors. This should be interesting.
Sina did not immediately respond to a request for comment, while Alibaba said it does not comment on rumors.
Image credit: Mark Ralston / AFP / Getty Images