Tudou: Back on the IPO Trail 土豆：重回IPO轨道

By newsdoug on June 20, 2011

Tudou IPO: an investor hot potato Video sharing site Xunlei may be delaying its upcoming IPO due to the China sell-off on Wall Street (previous post), but the bloodbath doesn’t seem to be deterring rival site Tudou. Chinese media are reporting that Tudou, whose name means potato in Chinese, has revived stalled plans for a New York IPO, after suspending those plans last fall while founder Gary Wang worked through a messy divorce. (English article; Chinese article) The reports say Tudou, which has yet to turn a profit, has filed its initial documents with the US securities regulator, and that it aims to list by the end of this month. Many will recall that Tudou was in a race with another rival, Youku (NYSE: YOKU), last fall to become China’s first publicly listed video sharing site — a race that Tudou ultimately lost when Wang’s divorce proceedings got in the way. Later reports emerged that Wang might be looking to sell Tudou, though the company insisted all along it was still aiming for an IPO. (previous post) This current plan doesn’t really surprise me, though I question how smart it is. Wang, like many other Chinese entrepreneurs, clearly wants to stay at the head of his company, hence his preference for an IPO versus a sale of Tudou to a rival. Furthermore, he’s probably so relieved that his divorce is finally resolved that he’s blind to the fact that his company — already less attractive due to its money-losing status — will IPO into a market where sentiment toward new China listings has grown ice cold over the last 2 months. That shift has already prompted rival Xunlei, which has a much stronger financial background, to delay its IPO. If it moves forward with its plan to list in the next couple of weeks, which seems likely, look for Tudou shares to price weakly, and to stumble out of the gate with a weak to outright disastrous trading debut.

Bottom line: Tudou’s rush to IPO into one of the weakest markets in more than a year will end with a weak pricing and potentially disastrous trading debut.

近来中国概念股在华尔街遭遇滑铁卢，中国视频分享网站迅雷可能会推迟IPO进程，但竞争对手土豆网似乎不为所动。据中国媒体报导，土豆网创始人王微与前妻已就离婚财产纠纷达成和解，网站之前暂停的IPO计划重回正轨。报导称土豆网已向美国证券交易委员会提交监管文件，计划最迟本月底前上市。很多人应该都记得土豆去年秋天与另外一家竞争对手优酷网<YOKU.N>展开上市赛跑，当时土豆因王微离婚纠纷而在这一竞赛中最终败北，优酷最终成功上市，成为中国首家上市的视频分享网站。稍後曾有报导称王微有意出售土豆，不过公司一直坚称目标仍为IPO。我虽怀疑土豆当前计划是否明智，但对此举本身我并不感意外。王微像很多中国企业家一样，明显希望继续掌舵，所以他会倾向於IPO，而不是把土豆出售给竞争对手。而且，离婚纠纷终於尘埃落定，王微大大松了一口气，以至于根本没有注意过去两个月来华尔街对中国概念股的态度跌至冰冷。华尔街的态度转变已经让迅雷推迟了IPO计划。如果未来几周土豆继续推进IPO，土豆股价定价可能非常弱，上市首日就有可能惨淡破发。

一句话：在目前华尔街冷眼对待中国概念股的情况下，土豆匆忙赴美IPO，最终定价可能很低，而且上市首秀可能灾难收场。