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China's Tudou falls in Nasdaq debut

08-18-2011 14:33 BJT

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Tudou, China's second-biggest video website, went public in the U.S. on Wednesday. The company's stock opened at 25 U.S. dollars and 11 cents a share on the Nasdaq, down 13 percent from its IPO price of 29 dollars. With economic turmoil around the world, some question if this is the right time to be going public. Natalie Carney has more.

11 I.P.Os were postponed last week alone due due to volatility in global markets.

Yet this didn't seem to affect one of China's largest internet companies from entering the US market.

The Shanghai-based company hopes to raise as much as $180 million from the offering of 6 million American depositary shares which opened at 25.11$ each.

James Baxter, General Council COO in New York Global Group said, "They are showing strength by being able to do their offering in this market because a lot of offerings have been canceled."

Photo provided by Nasdaq shows Gary Wang (L), CEO of Tudou, China's second-largest online video site Tudou Holdings Ltd., attending a ceremony at Nasdaq, New York, Aug. 17, 2011. Tudou on Wednesday issued shares on Nasdaq Stock Market, just one week after the markets underwent a huge turbulence following the downgrade of U.S. credit rating. (Xinhua)

James Baxter has been covering Wall Street from a legal standpoint for more than 40 years and says its essential for companies to be transparent

Baxter said, "In order to go public you have to be committed to be completely open as far as everything that goes on with the company and the management.".

Tudou was to go public last year, yet internal issues saw those plans stalled. Now resolved, Mr. Benjamin Wey, the president of New York Global Group, a private equity firm specialized in China related projects, thinks it's a good time despite global economic conditions.

Benjamin Wey, president of New York Global Group said, "It is the right time as Tudou has the funding needs. I think it is driven by funding needs rather than market conditions. Stocks go up, stocks come down so over long term a fundamentally strong company can do well."

And boy did those stocks come down on their debut day on Wall Street. The company is tapping the public market for cash to finance technology upgrades, bandwidth expansion and rights to videos.

Photo provided by Nasdaq shows Gary Wang (L Front), CEO of Tudou, China's second-largest online video site Tudou Holdings Ltd., attending a ceremony at Nasdaq, New York, Aug. 17, 2011. Tudou on Wednesday issued shares on Nasdaq Stock Market, just one week after the markets underwent a huge turbulence following the downgrade of U.S. credit rating. (Xinhua)

Natalie Carney reported, "According to the company's filling, it has accumulated losses of 179 million us dollars since it launched in 2005. However annual revenue has surged as have visitors to the site. It now sees around 200 million unique visitors monthly. Yet it still logs on second to main rival Youku.com, who went public in the US last year, surging more than 161 percent on their first day. Since, the internet company has seen their share prices increase almost three fold to XXX$. Tudou didn't fair as well".

Wey said, "I really think at this point there nothing they can do...for the near term I think the stock is going to be trading exactly where the market is suppose to be trading for the sector, Chinese internet stocks like Youku for example. If market conditions worsen Tudou may not trade well. But if markets start recovering, I think Tudou will trade just as well as Youku over time. Pretty much watch these two trading in parity."

Yet for US traded Chinese companies in particular, concerns exceed market volatility after reported accounting problems within some were discovered.

But for Tudou, there is hope that the confidence demonstrated by launching during these rough economic times will be reflected in investors choices going forward.

Tudou, China's second-biggest video website, went public in the U.S. on Wednesday.

Editor:Li Wanran |Source: CNTV.CN

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