Line (LN) Stock Pros and Cons: CNBC's Lipton Discusses
NEW YORK (TheStreet) -- Japanese messaging app Line (LN) - Get Report began publicly trading on the New York Stock Exchange today and "boasts a lot" of positives for investors, but it does not come without its negative points, CNBC's Josh Lipton said on "Squawk Alley" Thursday.
"Hundreds of millions of users rely on it to communicate through free instant messaging, voice and video calls," Lipton commented.
In April, the company reported 2016 first quarter revenue rose 21% year-over-year to $303 million. However, there are "two broad challenges" investors have to consider before buying into its stock, according to Lipton.
"One, monthly active users aren't growing as fast," he stated. From March 2015 to March 2016, active users rose by 6%, compared to a 30% gain the year before.
"The reason is because it has saturated its market," technology research firm Altimeter CEO Charlene Li explained in an interview on "Squawk Alley."
For Line to compete in the tech industry, its growth has to come from "one of two areas," Li noted.
"It has to come from either penetrating new markets or developing new services that more people would be interested in using," she continued.
Facebook (FB) will also prove to be a tough competitor for Line as the social media giant beats the messaging app in scale and size, Lipton added.
However, Li thinks Line will fare well. She pointed to strengths such as the company's ability to monetize its users at a faster pace than many of its rivals.
Shares of Line are soaring 27.74% to $41.95 this afternoon. The stock opened its first trading day at $42 per share, 29% higher than its initial offering price.
Line's offering will raise $1.3 billion, advancing it to be the largest tech IPO of the year.