Date
19 January 2017
Line’s biggest challenge is to prove that it can grow its user base under the shadow of two much bigger rivals, WhatsApp and WeChat. Photo: Internet
Line’s biggest challenge is to prove that it can grow its user base under the shadow of two much bigger rivals, WhatsApp and WeChat. Photo: Internet

Line still has a lot to prove to investors

Following their strong debut last week, shares of mobile messaging firm Line Corp. have eased back.

Despite its successful listing, Line still needs to prove to the market it can become consistently profitable and address investor concerns over its slowing user number growth and competition with the much bigger WhatsApp and WeChat.

Line is the number one mobile messaging platform in Japan, Thailand and Taiwan. However, its 218 million monthly active users is still far behind WhatsApp’s 1 billion and WeChat’s 700 million.

The rate of increment of Line’s user base has been slowing down over the past few years.

The company generated 120 billion yen (US$1.13 billion) in revenue last year, of which 41 percent came from selling games, streaming music and comics.

But the cost of expansion pushed the bottom line into the red.

Investors tend to compare Line with gaming firms like Zynga because of the company’s heavy reliance on a few popular games, and sales of emoticons and digital stickers, according to China Securities Journal.

Zynga’s hype proved to be short-lived and its shares came crashing down a few months after its listing.

What’s worth noting is the portion of Line messages including emoticons and stickers fell to 10 percent recently, from 12 percent in 2014, the report said.

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CG

EJ Insight writer

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