Last Thursday (April 17) Weibo (WB), a premier Chinese social media company, began trading on the NASDAQ. Weibo’s social media app is widely considered to be the “Chinese” version of Twitter (TWTR). Most interest in Weibo’s IPO stems from investor concern over future Chinese listings on American exchanges. For many prospective investors, Weibo is considered a case study meant to reflect the success of Alibaba’s future IPO. Luckily, for Alibaba pundits, Weibo is off to a wildly successful start.

Weibo’s stock was initially priced at $17, and has since climbed to a high of $24.48, which suggests that investment bankers underpriced its IPO (for once). This is similar to Twitter’s IPO, in a sense, which grew almost 50% in its first two months of trading. However, given Twitter’s history, and recent fall from grace, investors are rightfully skeptical of Weibo’s future growth.

One major obstacle that Weibo faces is that, much like Twitter, it has a volatile revenue stream. However, unlike Twitter, Weibo is profitable. The company generates revenues by selling ads and “in-app” game purchases, though the question remains, “is this strategy enough?” Perhaps. In the near-term this model appears acceptable, but only because Weibo’s membership is vastly growing. However, for long-term sustainability, Weibo must develop a more profitable, and less vulnerable, business model.

Another valid investor concern is that Weibo is only performing well because of its relationship with Alibaba, a Chinese E-Commerce site larger than Amazon and eBay combined. Unlike Weibo, Alibaba is highly profitable. It increased sales by an astounding 66% in Q4 of last year, and aims to generate $500 billion in future annual revenues (nearly 3x Apple’s 2013 total revenue)! Currently, Alibaba owns a large portion of Weibo stock, which has given Weibo credibility and stability. However, like all logical public companies, Weibo wants to increase its stock price. In order to do so, Weibo must become more independent and cut ties with Alibaba; hence its current dilemma.

Weibo has been described as China’s virtual town square, where users can “raise” and “discuss” a variety of issues (so long as the Chinese government approves). Thus, it’s no surprise that Weibo has indicated it has over 500 million members, or is it? According to the Wall Street Journal, and a study from Hong Kong University, as many as 86.9% of Weibo users never write posts. If this is true, Weibo is reaching a much smaller audience than it claims. This, in turn, makes Weibo a far less attractive advertising platform, and may explain its low “in-app” game revenues.

Weibo’s successful IPO can be attributed to its low initial offering price and association with Alibaba. If Weibo doesn’t display signs of increasing quarter-over-quarter profitability, Alibaba may cash out. If this occurs, Weibo’s stock price will likely tank and investors will refuse to touch the company.