25 May 2019

Jingdong set to ring in new IPO year as bell tolls for Linktone

On the day before Christmas, e-commerce giant Jingdong was making new noises that indicate it may make another attempt at an IPO in the new year, with word that it finally became profitable in the first three quarters of 2013.

Meantime, the small but longtime NASDAQ-listed Linktone (Nasdaq: LTON) announced plans to voluntarily delist from the exchange to save cash, continuing the steady stream of departures by many underappreciated US-listed Chinese firms. Unlike other firms to delist in this wave, Linktone’s move isn’t a true privatization and looks more like a pure effort to save cash, indicating the company may be struggling financially.

Let’s start with Jingdong, China’s second-largest e-commerce company, which has just given some very limited financial results for the first nine months of the year. The company said it posted a small profit during that period, though it didn’t say if that profit was on a net, operating, or other basis. The company said the gross merchandise value of products sold on its own and its open platform exceeded 100 billion yuan (US$16.4 billion) for the nine-month period.

The announcement of the profitability comes after Jingdong’s talkative CEO Liu Qiangdong said back in May that his company expected to become profitable by the end of this year or in the first half of 2014. That would appear to show that Jingdong has reached its target a little earlier than expected, though I suspect the profit is probably on an operating and not a net basis.

This announcement also comes just two weeks after Liu quietly returned to China after several months of study in the United States.

This sudden flurry of news follows a quiet period for Jingdong, which tried to launch an IPO last year but ultimately aborted the deal due to lack of investor interest. Liu’s return to China, combined with this announcement of the company’s profitability, seem to indicate that Jingdong may try to relaunch the IPO process next year, perhaps as soon as March after the Lunar New Year.

The company is undoubtedly encouraged by a string of five successful IPOs by Chinese firms in New York over the last two months, all of which have posted strong debuts. One of those, Baidu-backed (Nasdaq: BIDU) online travel agent Qunar (Nasdaq: QUNR), was losing big money at the time of its offering, indicating there’s still some investor appetite for loss-making firms like Jingdong. I do think sentiment now is much better than when Jingdong first tested the market for an IPO, and that we’re likely to see the company relaunch its plan for a New York listing next year.

From Jingdong, let’s look quickly at Linktone, a provider of media services that has a modest market value of just US$63 million. I’ll admit that one of the reasons I’m writing about such a small company is purely sentimental, since I remember writing about it many years ago when it made its original New York IPO. Linktone rose to prominence back then by providing paid services sent via cellphone text messages. But its fortunes quickly faded after China’s three telcos cracked down on such services.

Now Linktone says it is voluntarily delisting from the main NASDAQ exchange to conserve cash, though its shares will continue to trade in the over-the-counter market. Investors weren’t too thrilled about the move, with Linktone shares tumbling 37 percent after the announcement.

I’m surprised that Linktone didn’t make this move much earlier, as investors stopped caring about this company long ago. The move is logical for that reason, though it also hints that Linktone may be facing a cash shortage and is probably struggling just to survive. Regardless of the reasons, this move does represent the latest step in the ongoing cleanup of less desirable Chinese firms from New York markets, as investors focus on larger companies with better growth prospects.

Bottom line: Jingdong’s latest profit announcement indicates it could relaunch its IPO next year, while Linktone’s voluntarily delisting is part of a cash-conserving exercise.


A commentator on China company news and associate professor in the journalism department of Fudan University in Shanghai. Follow him on his blog at

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