With the Dow down almost 400 points today, and investors running for cover from risk, Chinese video site Tudou is looking at some pretty tough timing for its IPO. In an updated SEC filing, Tudou has proposed selling 6 million American Depositary Shares for between $28-30 each, raising up to $180 million.
Yesterday, China's Youku, which started as a YouTube-style user-uploaded video site, but has evolved to a Hulu-style distributor of professional video, went public on the New York Stock Exchange. It offered 15.85 million American Depositary Receipts, or "ADRs," which represent ownership shares in non-U.S. companies, at $12.80 apiece, raising over $200 million. When the market closed, the ADRs stood at $33.44, up 161%, the best one-day performance for a U.S. IPO in the last 5 years (they're up another $5 today as well). Youku, which recorded $35 million in revenue for the first nine months of this year (and a $25 million loss), had an end of day valuation of $3 billion+.
Yes, I know what you're thinking - this is crazy, the bubble days have returned and there's a huge "China factor" multiplier at work for Youku. All of that is no doubt true. But here's something else that's true - while the global economy and stock markets have undergone wrenching change and volatility over the last 2+ years, the online video market has boomed. For certain kinds of investors (both professional and non-professional) who value growth over everything else, there are few sectors which have more appealing characteristics. As tens of millions of people have adopted online and mobile video, devices for viewing online video on TVs have proliferated, premium content has become available and business models have firmed, investors have taken notice.
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