Note: To readers of my postings in English, I’d like to apologize for the original version of this article, which said the IPO would value Tudou at $3.2 billion. That figure was taken from a Financial Times article which, it turns out, vastly overstated Tudou’s market cap, which should have been $822 million. I’ve recast the posting slightly in light of that error and taken out the Financial Times link, but I do stand by my previous assessment that the IPO will be a dud on its debut.
I’m getting a bit weary of writing about video sharing site Tudou (Nasdaq: TUDO), which might consider changing its company description to “master of media manipulation” to reflect the way it has cleverly leaked a steady stream of rumors into the market to try and create buzz about its upcoming IPO. After a tumultuous week that saw rumors of at least 3 potential buyers for Tudou in the Chinese media (previous post), the company has finally gone ahead and priced its IPO in the middle of its indicated range, scuttling any potential for a last-minute buy-out of the company. Media are reporting that Tudou’s IPO pricing gives it a market cap of $822 million, about a third of that for rival Youku (NYSE: YOKU), whose shares doubled after its IPO late last year but have given back most of those gains since then. (English article; Chinese article) Youku’s shares actually fell 8 percent in Tuesday trade on Wall Street, reflecting investor disappointment that it wasn’t able to engineer a last-minute acquisition of Tudou that Tudou chairman Gary Wang was never really serious about to start with. I’m expecting Tudou’s shares to fall on their Wednesday trading debut, as the market I doubt there is much demand for this money-losing company that is a clear number-two in its sector to Youku, although its underwriters who should be commended for generating interest in the offering despite dismal market conditions. Once its price stabilizes, I’d look for Tudou, which lost $12 million in the second quarter, to quietly fade from the headlines and get back to the business of trying to turn profitable.
Bottom line: Tudou’s stock will falter on its trading debut, and will fail to attract much investor interest over the longer term.
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