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Weibo IPO Is a Test for Twitter, Alibaba

Tickers in this article: SINA TWTR WB YHOO

Updated from 8:25 a.m. ET to include closing share prices

NEW YORK (TheStreet) - Weibo , often referred to as the Chinese version of Twitter , began trading on the Nasdaq Global Select Market  on Thursday, surging over 19% after the company priced its initial public offering at the low end of its expected range.

The listing brought yet another fast-growing social media company to U.S. stock markets and could be a leading indicator of e-commerce giant  Alibaba Group's much anticipated IPO.

Beijing-based Weibo sold 16.8 million American depositary shares of its Class A stock at a price of $17 a share, or the low-end of its expected range. However, Weibo shares popped on their first day of trading, rising over 19% to close at $20.24 a share. Underwriters Goldman Sachs and Credit Suisse  will have the option to purchase an additional 2.52 million shares to cover over-allotments.

In total, Weibo raised $285.56 million in its IPO. The company first filed for a U.S. stock offering in mid-March.

In China, Weibo provides a way for users and organizations to publicly express themselves in real time and interact with others in a similar fashion to Twitter in the U.S. The company was founded in 2009 and is majority owned by Chinese internet company SINA . In the filing, Weibo said that it would use some IPO proceeds to repay loans to its parent company, Sina.

In early 2013, Chinese e-commerce giant Alibaba invested $585.8 million in Weibo for approximately 18% of the company's outstanding shares. According to a disclosure, Alibaba can increase its stake in the company to 30%. Alibaba is partially owned by Yahoo! , which has a 24% stake in the Chinese Internet giant.

In March, Alibaba announced that it too would be going public, seeking a listing in the United States, and not Hong Kong. On Tuesday, a disclosure in Yahoo's first-quarter earnings showed that Alibaba's profits more than doubled to $1.3 billion in the fourth quarter of 2013.

Weibo vs. Twitter

As of the end of 2013, Weibo had 129.1 million monthly active users and 61.4 million average daily active users. Over 70% of the company's monthly active users in accessed Weibo through mobile devices in December. Those figures indicate Weibo's user base is about half the size of Twitter, but its users are growing at a far-faster rate.

The company also relies upon minority investor Alibaba for a significant portion of its earnings.

Weibo generates revenues from advertising and marketing, similar to Twitter, but generates a lot of advertising revenue from one client, Alibaba. The company noted its advertising and marketing revenues increased by 191% from $51.0 million in 2012. However, advertising sold to Alibaba accounted for $49.1 million, or 33.1%, of its advertising and marketing revenues in 2013.