China’s Todou sees shares tumble on Wall Street debut

One of China’s largest online video companies has seen its shares fall sharply in the wake of its Wall Street debut.

Shares in the Shanghai-based Todou, which raised US$174-million with its US initial public offering, were priced at US$29.00 on the Nasdaq Stock Market and closed at US$25.56, a loss of 11.86 percent on the day. Trading under the ticker symbol “TUDO”, the company has a market capitalisation of US$867 million at the IPO price.

The company, which went live in 2005 and was serving some 65-million videos a day by late 2007, is one of the largest video serving sites in China. It currently claims over 200-million unique monthly visits. Tudou has also previously stated that it is one of the world’s largest bandwidth users, moving more than 1 Petabyte of data per day to some seven million users.

Despite still catering to a largely Chinese audience, Tudou is fast becoming popular with users in rest of the world because it allows the viewer to watch a wide variety of video contents ranging from licensed episodes of television shows and movies, in addition to the short 10 minute clips found on the likes of online video powerhouse YouTube.

Stephanie Chang of Renaissance Capital said “overall market volatility and risk aversion on behalf of IPO investors” may account for Tudou’s slide.

“Though Tudou is an intriguing growth story, it has a high risk profile due to its lack of profitability and the fact that it has lost share to market leader Youku over the past six months,” Chang said.

Tudou is the latest Chinese company to float stocks on the US capital market, where investors have been eager to get hold of shares in tech companies from the world’s fastest growing economy.

Such tech companies have sought to capitalise on the fact that China has the world’s largest online population with around 457 million users.

Todou’s opening day of US trading stands in sharp contrast to that of its rival Yoku. When Yoku listed in New York in December 2010, it saw its share price more than double on the first day of trading.

Other Chinese companies to have listed on Wall Street in recent months include online dating site Jiayuan and Chinese social network Renren.