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Can Tudou Break China IPO Bad Spell?

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internet_2 August 17, 2011 (Chinavestor) Chinese online video site Tudou (NASDAQ:TUDO) will start trading today on the NASDAQ after raising $174 million in pre-IPO yesterday. While China's internet offers vast opportunities, last five related IPOs turned to be a money pit for investors so far. Last time we wrote about risk associated with seemingly hot IPOs  was back in June this year, when LinkedIn (NYSE:LNKD) inspired Chinese social media site RenRen Inc. (NYSE:RENN) started trading. Since then things turned from bad to ugly. Investors lost the most on E Commerce China Dangdang Inc (NYSE:DANG) and the least on SouFun Holdings Ltd. (NYSE:SFUN) as the following chart testifies.

 

Performance of last five Chinese IPOs, 2010-2011

China_IPO_2011817

Let's take a look at the record so far:

  • E Commerce China Dangdang Inc (NYSE:DANG) just fell 13.99% on Tuesday after announcing second quarter numbers. That's on top of the 70% decline since the IPO.
  • Qihoo 360 Technology Co Ltd (NYSE:QIHU) is off -36% since March 30.
  • RenRen Inc. (NYSE:RENN) reported second quarter numbers on August 12 but failed to lift the company. The stocks if off -58% since the IPO.
  • Youku.com Inc. (NYSE:YOKU) fell right after second quarter earnings and is off 28.5% since the IPO. While revenues continue to grow, the company is still losing money, albeit at a slower rate.
  • Soufun Holdings Ltd. (NYSE:SFUN) fell following second quarter financials as well. The company issued a DIVIDEND, trying to shore up its share price. The stock is off 0.2% since the IPO.

Each and every Chinese IPO failed investors in 2011 so far. This doesn't mean Tudou (NASDAQ:TUDO) will fail as well, but it raises a red flag.

Another red flag is Chinese reverse mergers. Related article: Chinese reverse mergers fail investors

The good news is that investors able to separate darling from dogs made a lot of money off China's economic rise. Read Chinavestror Newsletters for stocks we like or sign up for Premium membeship to access our stock selection.



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