Line Corp. is preparing to test the public markets next week, the second significant tech IPO of 2016. The Japanese messaging app company is set to raise as much as $1.12 billion, or 116 billion yen, amid one of the most chaotic times for global markets in years, following the U.K.'s vote to leave the European Union.
Still, a $1 billion valuation would mark the biggest tech listing globally in 2016, topping Twilio's public debut at the end of June. Twilio restored investors' appetite for tech, marking the first U.S. venture-backed tech IPO of the year, where shares closed up almost 92 percent in their first day of trading. Now, Wall Street and Silicon Valley alike will be watching closely to see how other private companies react to Line's success or lack thereof.
Line halted its plans to go public two years ago in hopes of garnering stronger interest from investors, but instead the market for tech IPOs froze, and the delay might end up costing the company. The likes of Facebook, Google and Twitter have rapidly gained market share in the world of instant messaging and pose "direct competition" to Line's business today, the company said in an updated IPO prospectus.
Line's expected valuation ahead of its IPO is much less than the $10 to $20 billion that was set by investors when Line's parent company, South Korean Naver, previously talked of a listing in 2013. At that time, the idea of free chat apps was only beginning to catch on with millennials. Today, Line is the seventh most popular messenger app worldwide, behind Facebook's WhatsApp, Tencent's WeChat and Microsoft's Skype, data from researcher Statista shows.
"Line is in a competitive marketplace with some powerful and well-funded competitors," James Gellert, CEO of research firm Rapid Ratings, said in an interview. "They're also relatively unknown in the U.S., which always makes for a trickier sale."
Gellert cautions investors who might be "setting themselves up" for quarterly assessments of Line against social media giant Facebook. "Sounds rather Twitter-esque," he said. "Its metrics are worrying."
Line will fix its final price range on Monday, July 11, the latest SEC filing said, and shares are scheduled to begin trading on the NYSE, under the ticker symbol LN, on Thursday, July 14, and on the Tokyo Stock Exchange, on Friday, July 15. The latest price range was set between $28.50 and $32.50, or between 2,900 and 3,300 yen.