Everything You Need to Know About the Chinese Version of Twitter

The first of China’s big 2014 IPOs arrives on U.S. shores Thursday. Weibo, a Chinese social network that allows people to post real-time messages of up to 140 Chinese characters, will list on the Nasdaq with shares priced at $17. The company will be valued at $3.46 billion and raise around $285 million in the offering, figures at the low end of the company’s IPO pricing range and far below analyst expectations earlier this year. The performance of the Beijing-based startup could portend the trajectory of both Chinese stocks and the overall tech sector, which has seen a precipitous decline on Wall Street in the past month.

Weibo is a subsidiary of the Chinese Internet company Sina and is partially owned by the e-commerce giant Alibaba. Like Twitter, the website has become a digital water cooler where both ordinary people and celebrities gather to discuss events. It’s become a key resource for following news events in China, like the crash of an Asiana Airlines flight in San Francisco in July and the trial of former Chinese politician Xilai Bo in August. Weibo boasts 144 million monthly active users, making it more than half the size of Twitter.

Though initial reports indicated that Weibo would ride the coattails of Twitter’s successful November IPO to a valuation of as much as $7 billion, a confluence of factors have thrown some cold water on the company’s stock. The tech sector in general is has been on a slide for the last several weeks as investors abandon so-called momentum stocks, including Weibo’s parent company Sina. The first Chinese business to go public this year, an IT training firm called Tarena, has seen its share price drop more than 20 percent from its IPO price.

Weibo also faces its own, very specific set of challenges. The social network is heavily censored both by the Chinese government and the company itself to remove content that attempts to mobilize people toward political action. Such censorship could reduce user activity in the future. It also puts Weibo at a disadvantage against Tencent’s WeChat, a messaging service for smaller groups of people that allows people to more easily communicate away from the government’s prying eyes (though WeChat was hit with its own round of censorship last month). Weibo has also racked up more than $250 million in losses over the last three years, though it finally turned a small profit in the fourth quarter of 2013.

Still, it’s possible that with expectations now lowered, Weibo will shine. Investors have a keen interest in companies that target China’s quickly growing Internet population, which is expected to reach 800 million by 2015. The company is also linked to Alibaba, which is prepping a heavily anticipated IPO that could be be the largest for an Internet company since Facebook. Weibo will be a bellwether of the market’s appetite for both Chinese startups and tech stocks as a whole.