Facebook is officially banned in China, which gives local social network YY.com – with 400 million users and counting – a big leg up. The playing field is more even on the U.S. stock exchange Nasdaq, where Facebook and YY will begin competing for investors any day now.
After filing to go public earlier this month, YY could IPO as soon as this week, seeking around $90 milion at a fully diluted market value of around $664 million.
That’s small fry compared to Facebook, which is worth tens of billions of dollars. But it’s part of a broader impressive showing for Chinese internet firms. Search engine Baidu trades at a market cap of around $33 billion on NASDAQ, where YY is planning to list. Hong Kong-based portal Tencent is valued at $62 billion.
And YY CEO David Li has been talking up the company’s growth potential, bragging about the company’s utility in teleconferencing, popularity among online gamers, and reportedly brisk business selling access to online music performances. “We’re very strong on interest-based groups, whether it’s music, farming, education or medicine,” Li recently told Forbes Asia.
YY is also a leader in the “sticky” activity of group voice chat. The company says the typical user of its “YY Client” chat system spent 52 hours on the system in September, roughly nine times as much the typical American Facebook user spent on Facebook. YY claims 84 percent share of “real-time online group voice communications”
YY investors include the Asian arm of Steamboat Ventures, a venture capital affiliate of the Walt Disney Company. IPO underwriters include Morgan Stanley, Citi, and Deutsche Bank. In other words, thanks in part to state controls back home, YY is now able to roll with some the most red-blooded capitalists the free market has to offer.
