Line Messaging App : Biggest Tech IPO of 2016

Line is now valued at over $9 billion after its successful dual IPO

Line Messaging App : Biggest Tech IPO of 2016

With the growing number of messaging apps available at our fingertips, it is an understatement to say that the way we communicate is constantly changing. Many of the most common messaging apps including WhatsApp, Facebook Messenger and WeChat have already established both a large and loyal consumer base, creating a competitive market for other messaging apps to enter. However, Japanese messaging app Line has made quite an entrance after its recent dual initial public offering (IPO) in New York and Tokyo.

Line was launched by its parent company (South Korea’s Naver) in 2011 during the aftermath of the Japanese earthquake and tsunami, and was promoted as a new way of overcoming existing communication problems. It was quickly embraced by the Japanese population, soon becoming the country’s most popular messaging app. Line has also been well-received in Southeast Asia and is now recognised as the seventh most used messaging app in the world with 218 million users behind WhatsApp (1 billion) and Messenger (900 million) and WeChat (697 million). 

On July 14th, Line started trading its shares on both the New York and Tokyo Stock Exchange, officially becoming a public company. Identified by the symbol LN, the company started trading at $42 on the New York Stock Exchange, about 33% higher than its predicted initial public offering (IPO) price of $32.84, peaking at $44.49 during the early trading stages. In its domestic market, Line sold 13 million shares, raising $426.92 million, a modest sum compared to the $723 million accumulated from 22 million shares selling at the IPO price in America. 

These figures, together with the $1.27 billion earned by the stock offering, valued the company at $9.34 billion. Despite uncertainty surrounding whether Line’s IPO would ever take place, being delayed on several occasions and most recently by the Brexit vote, it completed the largest IPO of any tech company this year. Line’s IPO was primarily underwritten by Morgan Stanley, Goldman Sachs, JP Morgan and Nomura.  

In order to be successful, it was essential that Line offered its users something different from its competitors, building on fundamental services such as texting, voice calls and videos. Tailoring to the Asian market, Line makes most of its money from games and stickers similar to emojis (ranging from Hello Kitty to Taylor Swift), costing approximately a dollar per package, that people can insert in messages. It also gives users the opportunity to order food from local restaurants and make payments through the app’s unique features. In general, Line has optimised on their ability to incorporate brands into messaging without the user feeling bombarded with advertisements.
 

Takeshi Idezawa, chief operating officer of Line Corp., speaks during a news conference in Tokyo

Source: Line is now valued at over $9 billion after its successful dual IPO

Regardless of its impressive IPO and escalating popularity, Serkan Toto, a game industry consultant in Japan, believes Line’s consumer base will be restricted within Asian borders. Stating the dominance of WhatsApp and Messenger in European and American markets, as well as in emerging South American and Indian markets, Toto speculates a slowdown in the expansion of Line’s business. This prediction doesn’t come as a surprise to Line. In 2015, although the company recorded a revenue of $1.31 billion, it was undercut by the $72 million loss suffered in the same year as a result of efforts to further develop and grow the company. 

Ignoring its critics, Line seeks to continue the momentum its IPO has started, hoping to invest in global operations with a specific focus on Taiwan, Thailand and Indonesia. 

Here at Onque we are passionate about new innovations and designs coming up in the digital space. We are interested to know what you think about Line and the services it offers. Do you think Line has the capability and scope to further succeed in the world of messaging apps?

Leave us a comment below!

Line Messaging App : Biggest Tech IPO of 2016

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Line Messaging App : Biggest Tech IPO of 2016

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