The ‘Craigslist of China’ Pulls Off a Hot IPO

And expect other Chinese deals to hit the market soon

   

While most people are familiar with the classifieds website Craiglist, most people on Wall Street shrug at the name. That’s because the chances of a Craigslist IPO are pretty slim.

Now, though, you can invest in a company that provides a similar service — except in China.

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58.com (WUBA) is the largest online marketplace for local merchants and consumers in terms of monthly unique visitors, according to iResearch. As of the second quarter, that metric sat at 129.7 million. The site covers roughly 380 cities in China and has diverse categories like housing, jobs, used goods, automotive, pets, tickets and yellow pages. To help with the quality, the service also provides reviews of merchants.

Mobile is a key part of the success of 58.com. In fact, a big focus has been on location-based content, which has helped improve engagement and sales. Nearly 40% of the average monthly page views come from mobile apps.

And growth for the “Craigslist of China” has been strong. From 2010 to 2012, revenue soared from $10.7 million to $87.1 million. 58.com generates much of its revenues from selling memberships and providing online marketing services.

Yet the company’s opportunity is still in the nascent stages. The online classifieds market in China is forecast to expand from $275.4 million in 2012 to $2.4 billion by 2017, according to an iResearch Report.

Plus, consider that there are about 57 million small and mid-size businesses in the country. The S-1 for 58.com noted:

“Due to their relatively smaller scale, local merchants in China face a number of inherent challenges when conducting business, which include marketing effectively and gaining credibility and consumer trust. These challenges have set the stage for the emergence of online classifieds platforms as a cost-effective medium to connect local merchants with potential customers.”

But the company will not be the only Chinese online operator to hit the U.S. IPO market. Tomorrow Baidu’s (BIDU) travel business, Qunar, will pull off its offering. There are also other deals in the pipeline like 500.com (an online sports lottery) and Sungy Mobile (an app developer).

Yet the most aniticapated deal is Alibaba which Yahoo (YHOO) has a stake in and which could fetch a $100+ billion valuation. An IPO is expected for sometime in the first half of next year.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/ipo-playbook/craigslist-china-pulls-hot-ipo/.

©2014 InvestorPlace Media, LLC

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