Wall Street might have another China-based winner on its hands.
Chinese video site Youku made its debut on the New York Stock Exchange yesterday, and after all the trading was said and done, the stock price was up 161 percent over its initial per-share price of $12.80. It closed the day at $33.44. That momentum is helping to carry the stock to even greater heights today. As of this writing, Youku shares are up nearly $5 to $38.36. The company's market cap is now at over $2.6 billion.
Youku's IPO success is following in the footsteps of China's largest search engine, Baidu. According to CBS Marketwatch, which reported on Baidu's IPO in August 2005, the company's shares rose 354 percent that month, sending the price to $66 from their opening price of $27. Currently, Baidu shares are trading at $107.68.
Youku expects to generate approximately $186.6 million from its IPO. The company said in a filing with the Securities and Exchange Commission that it plans to use the proceeds to invest in "technology, infrastructure, and product development efforts." It will also acquire more video content and expand its "sales and marketing efforts."
All that cash might do Youku some good. The company generated approximately $35 million over the nine-month period ended September 30, but posted a net loss during that time of nearly $25 million.
That said, Youku, which launched in 2006, is wildly popular in China. The service, which is basically the Hulu of China, currently attracts about 203 million unique visitors each month "from homes and offices." It has an additional 61 million unique visitors who access its service from Internet cafes. The company claims to have "a 40 percent share of total user time spent viewing online videos among Chinese Internet users."