Shares in Chinese online video company Youku.com (優酷) soared 161 percent on their first day of trading on Wall Street — the strongest New York Stock Exchange debut in more than five years.
Youku’s founder and chief executive Victor Koo (古永鏘) rang the opening bell on Wednesday to celebrate the firm’s debut, which ended at US$33.44 from their US$12.80 pricing, completing a US$203 million initial public offering (IPO).
The first-day performance by Youku — whose name means excellent and cool — was the best since Baidu (百度), China’s most popular search engine, rose 354 percent in August 2005, according to New York Stock Exchange data.
The listing by China’s number one video site by audience and advertising revenue raises the pressure on its rival Tudou.com (土豆), which filed last month for its own US$120 million US offering.
The IPO proceeds could provide Beijing-based Youku with huge advantages over Tudou if the latter fails to list during the current favourable window for Chinese IPOs in the United States, experts say.
In a sign of the strong appetite for Chinese stocks, online bookseller E-Commerce China Dangdang (當當), which was also making its NYSE debut, closed at US$29.91, up 86.9 percent from its listing price of US$16.
It’s no surprise that US investors would feel confident about buying stock in a company comparable to Amazon, said Scott Sweet, senior managing partner of analysis firm IPOBoutique. After all, he said, Amazon’s stock is near a 52-week high and it wasn’t even as evolved a company when it went public in 1997. For instance, it had not yet expanded its product offerings to sell shoes and home appliances, among other items.
“China Dangdang is further along in their infancy and more like Amazon now than Amazon was in the first few years,” he said.
Youku had an audience of 252 million in the third quarter, ahead of Tudou’s 225 million viewers, according to Beijing-based research firm Analysys International.
A total of 319 million people watched online videos in China over that three-month period, with the same viewers visiting multiple sites, Analysys said.
The online video advertising market’s value rose 148 percent on year in the third quarter to 621 million yuan (US$93.5 million), with Youku taking a 23 percent share and Tudou 19 percent, according to Analysys.
However, both companies have yet to make a profit.
Youku, founded in 2006, has raised US$160 million privately and has US$10 million in debt, although it has reportedly said it expects to turn a profit in 2013.