initial public offerings (IPOs) trading on American exchanges

Wednesday, August 17, 2011

Tudou (TUDO) - profile

Tudou, Inc. (simplified Chinese: 土豆网; literally "Potato Net") is one of the largest video websites in China, where users can upload, view and share video clips. Tudou went live on April 15, 2005 and by September 2007, served over 55 million videos each day.

  • Website:
  • Started trading on the NASDAQ on August 17, 2011; raising $174 million
  • Opened 13% below IPO pricing, giving the company a valuation of $2.8 billion (as opposed to $3.2 billion at $29 per share)
  • Based in Shanghai and registered as a Cayman Islands holding company (like many Chinese companies)
  • Competitor: Youku (YOKU) debuted its IPO in December 2010
  • Has doubled its number of registered users in the past two years, to 90 million at the end of June.
  • However, the six-year-old company's losses have widened. Its net loss in the three months to 31 March was $52m on revenues of $12.1m.

Tudou filed for an IPO last November but the process was delayed due to a lawsuit by the former wife of its founder, chairman and CEO, Gary Wang.

Since the launch of its online video site in April 2005, Tudou's growth has been dramatic. Its registered user base more than doubled to 78.2 million in the two-year period between the end of 2008 and the end of 2010, and was at 90.1 million as of the end of June 2011.

The company's revenue has also risen sharply in recent years, but its losses have widened. In the most recent reporting period, the three months ended March 31, the company's net revenue rose 167 percent to 79.4 million yuan, or $12.1 million. Its net loss attributable to ordinary shareholders widened almost ninefold to 340.7 million yuan, or $52 million, in the same period.

Founded in 2005, Tudou is more Hulu or Netflix than YouTube. The company, which has raised $126 million from General Catalyst, IDG Capital Partners, and GGV Capital, hosts over 40 million videos viewed by over 200 million unique visitors a month. This morning, CEO Gary Wang told us that this site is serving 40 percent of China’s total online population monthly.

The company wants to use its IPO funds for content acquisitions as bandwidth charges. Being a Hulu-like video platform in China poses many challenges. First buying premium content is expensive and Tudou wants to bring fresh, premium content to its massive online audience. Additionally, Tudou is working with a large number of content owners to negotiate licensing deals.

Unlike Hulu, who features English and U.S. content, Tudou is negotiating with U.S. studios and media companies as well as dozens of premium content providers in China, Korea, Japan and other countries. The Chinese audience craves a large variety of global audience, and the company needs to come to agreements with all of these providers.

With this large amount of content, the movement towards HD videos and increasing traffic, the company needs to invest in bandwidth as well to sustain the platform. Of course, mobile is also a huge part of Tudou’s strategy and the funds raised in the offering are sure to be used in additional mobile development efforts.

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