Message received. Wall Street still has an appetite for big tech IPOs.
Line, operator of a Japanese messaging app popular in several Asian countries, soared in its debut on the New York Stock Exchange on Thursday morning after completing the largest public offering of any tech company this year.
Line, trading under the ticker symbol “LN,” opened at $42. That’s a 30% pop from its IPO price of $32.84, showing strong investor demand despite lingering concerns over user growth and Line’s ability to compete against apps from Facebook and WeChat.
The company raised $1.3 billion from selling shares on the stock market in New York and in Tokyo, where it begins trading on 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 public debut is a long time coming. Line previously pulled plans for an IPO in 2014. But this year it’s a hot commodity.
The messaging app maker is just the fifth tech company to go public in 2016, as billion-dollar startups wait out the volatile global markets and lean on private venture funding instead. A strong public debut for Line could push companies to reconsider that strategy of staying private.
For investors, the appeal of Line is similar to the appeal of social networks like Facebook(FB, Tech30) and Twitter(TWTR, Tech30). It has a large audience of devoted users who practically live inside the app — and the potential to make money off of them through ads, virtual goods and transactions.
“It’s a near-monopoly platform in Japan,” Atul Goyal, an analyst with Jefferies, wrote in an investor note this week. “This position is similar to that of Tencent (China), Kakao (Korea), and Facebook (Western markets).”
If Facebook and Twitter are any indication, though, the real test will come in the next few months as investors scrutinize its user and sales growth.
Line’s user growth has slowed to a halt in recent quarters, hitting 218 million monthly actives in March. It has also struggled to gain traction in markets outside Japan, Thailand, Indonesia and Taiwan. Sales climbed to more than $1 billion in 2015 for the first time, but the company is not consistently profitable.
Maybe that’s why the bear was frowning at the stock exchange.