Shares of Tudou (土豆), the lone company to go public on Wall Street this week after a string of failed deals last week, tumbled almost 12 percent on their NASDAQ debut on Wednesday.
Tudou Holdings Ltd is the second Chinese online video Web site to go public as Internet access in China grows. Its rival, Youku.com (優酷), the largest online video site in China, posted the biggest first-day jump of last year. Youku more than doubled on its NYSE debut.
Chinese tech stocks flooded the US late last year. Tudou’s name even speaks to the companies’ hopes of eventually making money from the Chinese appetite for the Web.
In Chinese, Tudou means “potato,” a reference to the term “couch potato,” Tudou CEO Gary Wang (王微) said.
“It’s our view that eventually a person can become a couch potato in front of a computer monitor as well as in front of a TV screen,” Wang said.
Most Chinese companies trying to go public in the US since Youku’s entry have not fared as well. Investors have grown wary after the reported accounting problems of several US-traded Chinese companies.
The 11 Chinese companies that have gone public on the NASDAQ and NYSE this year are down 13 percent, on average, from their initial public offering (IPO) price this year, according to data provider Dealogic. That doesn’t include Tudou.
All the other companies that listed in the US this year are nearly unchanged, on average.
Two potential Chinese IPOs were canceled during last week’s market upheaval, when nine IPOs were pulled.
“We had a nervous market about Chinese stocks to begin with, and many of them really have gotten hammered,” said David Menlow of IPO Financial, an IPO research firm.
Tudou’s weak entry would make investors even more wary of Chinese companies going public in the US, he said.
Youku stock has not performed well in the market. After shooting up more than 161 percent in its debut in early December and climbing early this year, it has come off its mid-April peak of US$69.95.
Shares have lost more than 60 percent of their value since then, closing at US$27.01 on Tuesday. Youku’s stock is worth less than it was at the end of its first day as a public company.
While Tudou nose-dived US$3.44 to US$25.56 on Wednesday, Youku gained nearly 13 percent.
Tudou and its stockholders had raised US$174 million by Tuesday night, pricing US-traded shares at US$29 apiece. That was in the middle of the expected pricing range.
Tudou’s Chinese site lets users upload video, like Google Inc’s YouTube. It also licenses content for its site, such as popular TV shows and movies, and makes its own video.