Messaging app Line skyrockets over 50% in Tokyo trading debut

Traders and members of the media watch monitors with Line Corp. stock information on display at the NYSE in New York, US, on July 14.
Traders and members of the media watch monitors with Line Corp. stock information on display at the NYSE in New York, US, on July 14.PHOTO: BLOOMBERG

TOKYO (AFP) - Messaging app Line skyrocketed in its Tokyo trading debut on Friday (July 15), soaring more than 50 per cent above its initial public offering price after the biggest technology share sale this year.

The surge followed Japan-based Line's new shares roaring to life in New York, where it kicked off trading on Thursday after the US$1.3 billion (S$1.75 billion) IPO.

The sizzling dual-listing suggested investors are betting Line can hold its own in a field crowded with mobile messaging services such as Facebook Messenger, WeChat and WhatsApp.

But the company, which grew out of Japan's 2011 quake-tsunami disaster, could face challenges boosting its popularity beyond Asia and some Spanish language markets.

"Investors are giving Line high marks for its growth potential and the IPO should boost its name recognition," said Hideki Yasuda, an analyst at Ace Research Institute in Tokyo.

"But Line already has a big number of users and I think it will be tough for them to increase that.

"What investors are focused on now is what Line will do with that large number of users to expand its growth through advertising revenue, for example."

In Tokyo, Line's new shares roared as high as 5,000 yen in early trading, up from the 3,300 yen IPO price and valuing the firm at nearly US$10 billion.

The shares, which went untraded at the open as buy orders swamped sell orders, sat at 4,680 yen at the midday break, up nearly 42 per cent.

Line, which is owned by South Korea's Naver Corp, debuted overnight in New York where its stock soared about 27 per cent by the close.

Line sold 35 million shares in all - about two thirds in the US - and said it would exercise an option to sell another 5.25 million shares, underscoring strong demand for the offering.

Line's service lets users make free calls, send instant messages, and post photos or short videos, along with a host of other paid services.

It combines attributes from Facebook, Skype and WhatsApp with games and a mobile payment service also on offer.

But what has set it apart so far is a huge assortment of cartoon "stickers", which some too-busy-to-text fans rely on to communicate - a kind of animated language.

The stickers are hugely popular in Japan, especially among teenagers, and Line has been able to make money off them.

The company counts about 218 million active monthly users, and is strongest in Japan, Thailand, Taiwan and Indonesia, but has relatively little presence in the US and Europe.

Line executives said proceeds from the share sale would initially be earmarked for developing in markets where the service is strongest.

"We will be focusing on our four key markets: Japan, Taiwan, Thailand and Indonesia," Line's chief financial officer In-Joon Hwang said in a Bloomberg TV interview.

"We will be using money for any investment opportunity to strengthen existing business."

Line's messaging service launched in 2011 after the quake-tsunami tragedy damaged Japan's telecoms infrastructure nationwide, forcing staff at Naver's Japanese unit to use online resources to communicate.

The messaging service was later spun off as a separate firm, based in Tokyo.

Last year, Line posted revenue of 120 billion yen, up 40 per cent from the year before, but booked an overall loss, which it blamed on rising staff costs and other expenses.