"The main risk [to Line] is through the competition, from a growth perspective," Jiong Shao, regional head of internet research, at Macquarie Securities, told CNBC.
"If you are dominant in Japan, fine, but in order to grow further you may have to go to the Middle East or Indonesia. In these types of markets you are competing with either the entrenched guys or the other players," he said.
Gaining traction in a market where the brand is relatively unknown can be an issue for free messaging service providers, as they rely so heavily on 'word-of-mouth,' analysts told CNBC.
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Neo Sijin, a 23-year old student from Singapore, told CNBC she had downloaded Line but never ended up using it.
"I was attracted to Line because they had really cool stickers, and like Twitter, it allows you to update your statuses. But I soon got bored of it because I realized that no one uses Line and everyone is on WhatsApp," she said.
Macquarie's Shao said breaking into completely new markets could prove a challenge for Line, though he noted that it would be a challenge for every player in the space.
"If you don't compete as well, for whatever reason - it could be that you are not spending as much marketing dollars or you are not targeting the right users - that's the risk from the growth forecast perspective. All the new competitors want these same markets just as badly as Line does," he added.
But Shao pointed out that free messaging providers like Line and China's WeChat have an edge over WhatsApp because their strategies have more room for growth from a monetization standpoint.
A spokesperson for Line told CNBC their main area of growth was Europe at present, but they expected growth to be steady there rather than dramatic.
"Certain countries may prove to be quite a challenge, so we are taking it one step at a time," the spokesperson added.
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Line makes most of its money through selling its stickers and games, earning around $10 million a month from sticker sales, while WhatsApp's main source of revenue is derived from its initial one-off charge to download the application.
"Line and WeChat and all these other players have formed a new path to prosperity. They have used the messaging as the glue and have built that out into a social network. Now Line makes most its money from games and who know what's next?" he added.
Line reported third-quarter gross revenue of $165 million, up 50 percent on the previous quarter. The company is rumored to be considering an IPO worth $10 billion, but the rumors have not been confirmed, Reuters reported last month.
Some media outlets, including tech blog TechCrunch, have questioned the validity of Line's user numbers, arguing that Line counts both registered and active users together, and also double counts users if the same user is using Line on two different devices, implying the figures are inflated.
When contacted by CNBC, Line did not refute the fact that it counts both registered and active users in its user statistics but said the proportion of active users was high, at 85 percent in Japan, for example.
—By CNBC's Katie Holliday: Follow her on Twitter
Correction: An earlier version of this story stated that Line's user base was 50 million users behind WhatsApp. This was an unfair comparison as Line has reported 300 million registered users, while WhatsApp have reported 350 million active users.
Line has been contacted by CNBC for data reflecting its active user base. The firm said 85 percent of its Japanese users are active, but was unable to give an overall figure.