You might not have heard of the messaging app Line but it’s the most popular app of its kind in Thailand, Indonesia, Taiwan and Japan and it’s set to begin selling shares for the first time in an initial public offering (IPO) in both New York and Tokyo.
What is it?
Line is a messaging app created in the wake of the 2011 Japanese Tsunami. As a result of the disaster many normal channels of communication had broken down and the Line app was developed by internet company Naver for its staff as a means of internet-based communication.
Naver opened the app to the public in Japan later that year where it quickly became incredibly popular, before gaining traction in other Asian countries.
In some ways it’s similar to services like WhatsApp or Facebook Messenger, offering virtual stickers, animated emojis, and games. At the same time it’s so much more than these services, offering its users a way to call and message friends, keep up with news and entertainment, order taxis, make mobile payments, find discount vouchers, and stream music.
Most of the app’s money is made from advertising and through sales of its virtual stickers and games starring cute mascot figures.
If its 218 million monthly active users aren’t enough of a sign of its appeal, Line has also opened physical stores which sell merchandise featuring popular characters from the app’s games and stickers.
Why is it going public?
In its filing to go public, Line notes that though it’s seeing a consistent increase in popularity in the four countries where it’s already popular, it’s struggling to get a foothold outside of them and has actually seen a “significant decrease” in monthly active users elsewhere.
Line says that its financial performance “has been and will continue to be significantly determined by [its] success in adding, retaining and engaging active users.”
The hope is that by going public Line will be able to raise the funds to continue its growth inside Asia whilst expanding worldwide and will be more prepared to take on rival services such as WhatsApp and Facebook.
What's it worth?
Before opening in the Stock Exchange Line was being described as Japan's biggest tech IPO of the year and it was expected to raise up to $1.3bn (£1bn) after setting its flotation price at 3,300 yen ($33; £25) per share.
When trading opened in New York this morning shares actually began selling at $42 before climbing 31 per cent to $42.91 and it's now being called the largest technology initial public offering of 2016.
Line's shares will begin trading in Tokyo on Friday with the opening price implying a market valuation of $8.82 billion, including the shares yet to start trading in Japan.
Line is an attractive investment prospect in the sense that it already has a large dedicated user base from whom it’s able to make money in many different ways.
With its many different services, it’s a sign of just what chat apps are capable of and gives some insight into how the apps we use could evolve in the future, becoming integral parts of our daily lives.
It also highlights just how powerful adorable characters well-suited to merchandise adaption are even in the messaging app world.
If Line manages to establish itself in the US and beyond it could be huge, though with such a high number of already popular messaging apps on the market doing so will be no easy feat.
With such a successful debut in the Stock Exchange, though, it's clearly the next big messaging app to keep an eye on.
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