NEW YORK (TheStreet) -- After the all-stock merger between Youku(YOKU_) andTudou(TUDO_) a couple of weeks ago, Youku's stock has receded from the $32 levels it hit the day of the deal announcement.
The stock is now back down at the $24 level -- and actually less than where it traded before the deal was publicized.
Read the full post in TheStreet
Here's my appearance from earlier today on Bloomberg TV's Money Moves with Trish Regan:
[Long YHOO, AAPL, and YOKU]
NEW YORK (TheStreet) -- Most believe the stock/business story of 2012 is going to beFacebook -- specifically its rumored IPO which should come before the middle of the year. That's probably true. Yet, ironically, 2012 is also the year in which you need to protect yourself from other falling social media IPOs.
Baidu may put Tudou out of its IPO misery, by acquiring the firm and rolling it into its Qiyi service.
There is too much misinformation and conservatism circulating about the value of Yahoo!'s stake in Alibaba Group. It's time for Yahoo!'s board to set the record straight by selling a 10% piece of its stake.
Don't expect to find the next Baidu in the upcoming crop of Chinese IPOs. However, there are many niche players that will still be very profitable and successful.
Read the full post here at Forbes
There will be a time when the China tech bubble pops - and it will be a severe reckoning - but that day is still likely at least two years away.
Read the full post here at Forbes.
By Eric Jackson The short answer is I don't really like the company, viewed by many as the "Facebook of China." But investors would be wise to get their hands on as many shares at the offer price as possible, because the stock will be hot out of the gate. A couple of weeks ago, I gave my summary of the company's F-1 filing with the Securities and Exchange Commission. I said that the number of active users seemed to be far lower than what the company had suggested when it was still private and didn't have to worry about running afoul of pesky securities laws. At the end of 2010, the company had only 24 million unique log-ons for the month of December, almost flat compared with December 2009. Revenues in the last three quarters have also been flat: $20 million, $22 million and $21 million, respectively. That's not a hockey stick. I continue to hold rival Sina (SINA - commentary - Trade Now) long because I believe the growth of itsWeibo microblogging service continues at a pace we don't yet fully appreciate. Various reports I have heard from China suggest that many young users are dropping RenRen in favor of Weibo. That said, the IPO process for RenRen has gone very well. Even before RenRen's U.S. road show, Asian demand had caused the IPO's bankers to raise the target offer price by $3 to a range of $12 to $14 per share. The company is now seeking to raise $743 million from the offering instead of about $500 million. Maybe it's a Facebook thing. That company appears to be on track to do $2 billion in revenues this year and $4 billion next year. Facebook just released a report indicating their growth is faster than previously expected and on track for a successful IPO later this year. Of course, Facebook recently indicated that it is looking at entering the Chinese market through a joint venture with Chinese Internet search giant Baidu(BIDU - commentary - Trade Now). Or maybe it's a China Internet thing. Youku (YOKU - commentary - Trade Now) is an online video site that did $58 million for the full-year of 2010, with a net loss of $31 million. Yet, the company has a $6.2 billion market capitalization. [*** This post is an excerpt of the full article, available by clicking here to go to RealMoney.com. Note: subscription required. ***]
RealMoney Contributor
5/2/2011 1:00 PM EDT
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"Do You Like RenRen?"
I was asked that question more times last week than any other. It's actually surprising to me how many casual China investors are curious about this initial public offering, which is set to debut on U.S. exchanges Wednesday under the ticker "RENN."
By Eric Jackson
NEW YORK (TheStreet) -- China Internet stocks are on fire. The unstoppable SINA(SINA_) is now up 106% year-to-date. SOHU(SOHU_) is up 56%. Baidu(BIDU_) is up 53%. Even new IPO Youku (YOKU_) is up 94% year-to-date.
But it would not be for another 3.5 years after Yahoo!'s IPO that the "dot com" bubble burst.
[** This post is an excerpt of the full article, which is available on TheStreet.com by clicking here. Free Site.**]
Sphere: Related ContentBy Eric Jackson
NEW YORK (TheStreet) -- The China bears, who include Jim Chanos and Hugh Hendry, have been wrong for two and a half years. Which is puzzling because if you are looking for a part of the world to invest in during the next five to 10 years, how could one ignore China?
[** This post is an excerpt of the full article, which is available on TheStreet.com by clicking here. Free Site.**]
Sphere: Related ContentBy Eric Jackson It's time for my report card. In the video, I offered the following picks for the quarter: Of these, Sina has been a monster. It's risen 56% this quarter, having touched new highs this week above $100. The stock has come a long way since I said it was deeply undervalued, given the performance of its Weibo microblogging platform, as compared with Twitter. I still love everything the company's management is doing and will continue to hold it likely for the balance of the year. Baidu has also had a stellar quarter. It's up 39% so far. Early in January, the stock was below $100. It's going out above $130. There's a bit of a tempest in a teapot going on over there at the moment, with some fellow RealMoney contributors accusing Baidu of illegally posting their content online. There are copyright negotiations ongoing, but it's a sideshow. Baidu remains the top dog in search in China, and it's poised for more gains for the balance of the year. Youku has also been a winner. It's up 45% for the quarter so far. However, you'll notice in my video that I suggested waiting until the company's first quarterly numbers in March before buying -- because I expected the stock to stay lower. It didn't. If you had taken my advice, though, you would still have had a 14% gain for the quarter. Still, as I noted in a RealMoney piece Monday, I'm now bearish on these shares. I believe it has run way ahead of itself, and that its competitive environment has changed even since December. I'm now short the stock [*** This post is an excerpt of the full article, available by clicking here to go to RealMoney.com. Note: subscription required. ***]
RealMoney Contributor
3/31/2011 9:00 AM EDT
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On Dec. 24, I gave my top four picks for the Chinese Internet sector for 2011. The video, with my picks and rationale, can be accessed here.
By Eric Jackson On Friday, the stock closed a penny under $50 -- its highest close ever. That means that it now has a market capitalization of over $5 billion. This is a company that did $23 million in revenue in the fourth quarter, with a net loss of $6 million. Youku is a great "story stock," like Tesla Motors(TSLA - commentary - Trade Now) or some pre-revenue biotech company in a hot new space. It has low to no revenue but infinite upside, so the story goes. I've defended the company before, especially at the time of its IPO and in the following weeks. Skeptics have been saying this company was over-hyped. In its defense, it is the No. 1 online video player in China today. Great U.S.-based venture capitalists have poured money into it. And its CEO, Victor Koo, is well-spoken and very credible. Listen to the recent earnings call, and you can understand why many U.S. investors would be comfortable buying into a company under his leadership. He gives the sense of a very steady hand on the wheel. However, I can't defend Youku at the $50 range with over a $5 billion market capitalization -- 4x its IPO offer price. When Youku went public, the most common reference point you heard in the U.S. media was that it was the "YouTube of China." Over the last couple of months, you hear a shift, and the majority of people drawing comparisons now call it the "Netflix (NFLX - commentary - Trade Now) of China." [*** This post is an excerpt of the full article, available by clicking here to go to RealMoney.com. Note: subscription required. ***]
RealMoney Contributor
3/28/2011 11:30 AM EDT
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Youku (YOKU - commentary - Trade Now) has been probably the hottest IPO of the last 12 months. But there's good reason to be wary of holding the stock from here. Some growing competitive threats within China and a looming IPO lockup expiration in a little over two months will weigh on the stock.
Youku is a leader in the exploding online video space within China. It went public last Dec. 8 and closed at $33.44 -- 160% above its offer price of $12.80.
By Eric Jackson There are signs, however, that several new Chinese companies plan to come to market soon in the U.S. On Monday, Qihoo 360 Technologyfiled a prospectus with the Securities and Exchange Commission to hold an IPO. Qihoo says it is China's third-largest Internet company by user numbers (339 million). It makes antivirus computer security software and is the second-most-popular Internet browser in China after Microsoft's (MSFT - commentary - Trade Now) Internet Explorer. UBS and Citi are co-managing the offering. Qihoo's revenue has exploded over the past two years, going from $17 million in 2008 to $58 million last year. Over this time, the business has completely remade itself. Previously, two-thirds of its revenue came from selling third-party security software, but now more than 93% of its revenue comes from selling its own software and Internet services, including online advertising. Unlike Dangdang and Youku, Qihoo is solidly profitable. Its net margins were 15% last year. The company already has $61 million in cash on its balance sheet as of the end of December. In its filing, the company said it seeks to raise up to $200 million from this offering. [*** This post is an excerpt of the full article, available by clicking here to go to RealMoney.com. Note: subscription required. ***]
RealMoney Contributor
3/17/2011 12:15 PM EDT
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After the successful U.S. market debuts of E-Commerce China Dangdang (DANG -commentary - Trade Now) and Youku.com(YOKU - commentary - Trade Now) in December, I expected to see many more Chinese companies file for initial public offerings in early 2011. Until a few days ago, though, there were none.
By Eric Jackson It debuted with great fanfare in an initial public offering last December. The stock priced at $16 a share, which was considered high, opened at $24 and quickly went to the $30 range, closing at a high above $34 in mid-January. Since then, the stock has steadily been returning to its initial trading levels. Yesterday, it released its first earnings report since going public. As usual with these Chinese stocks, it takes time for the market to digest the news contained in the results. The initial reaction was positive. The stock traded up in the premarket to almost $27 after closing the prior day under $26. But it immediately started selling off yesterday and hasn't stopped yet. Today, the stock is currently trading under $23, down nearly 7%. So what happened in the earnings report? The e-commerce site, which still makes the majority of its money selling books, revealed that its net revenue for the fourth quarter was up 58% year-over-year to $108 million and its full-year revenue also grew 57% to $346 million. They also boasted in their earnings call that non-book revenue grew 150%. They aim to reposition themselves -- much like Amazon (AMZN - commentary - Trade Now) did 10 years ago -- by selling a variety of goods via e-commerce rather than just books, which tend to be lower-margin sales. General merchandise revenues in 2010 were up 156% to $59.4 million from the previous year. Yet, the scale of those general merchandise sales -- only 17% of overall sales -- shows that Dangdang still has a way to go to credibly saying it's no longer just a bookseller. Its first-quarter guidance indicated that net revenue would be between $102.4 million and $103.6 million, representing a 50% increase year over year. That was in line with estimates. [*** This post is an excerpt of the full article, available by clicking here to go to RealMoney.com. Note: subscription required. ***]
RealMoney Contributor
3/10/2011 1:45 PM EST
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What happened to E-Commerce China Dangdang (DANG - commentary - Trade Now)?
By Eric Jackson And even though Tudou was No. 2 in the market, it was close enough to Youku that many investors thought it was basically a dead heat between the two currently (different numbers have been bandied about, but it basically looks like Youku has 20% of the market while Tudou has 16%). Few observers expected the type of successful IPO Youku received when it finally went public in December. The stock was immediately a hit and tripled its offer price. Critics quickly sputtered that investors were being irrational. One person called it the most overvalued stock in the universe. While Youku has been highly volatile for the last month since its IPO, the price has held up - the stock is currently trading in the midrange of its public trading price (since its IPO). Partly, it has been supported by the recent news that Youku has struck a deal to stream the Hollywood movie Inception over its service to subscribers. This deal fed into some observers who have said that both Tudou and Youku are more likely to become the future "Netflix (NFLX - commentary - Trade Now) of China" rather than another YouTube. With Netflix moving to focus more on streaming movies to its customers rather than mailing DVDs, you can see how the Inception deal would get people excited.
RealMoney Contributor
1/14/2011 7:49 AM EST
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Whatever happened to Tudou? The "YouTube of China" filed an initial public offering (IPO) and applied to trade on the Nasdaq under the symbol TUDO in the U.S. in early November. This was a week before its rival Youku (YOKU - commentary - Trade Now) did. Yet, we haven't heard from Tudou since. What's going on?
Initially, when both Tudou and Youku filed their prospectuses to do an IPO, many Western investors were wondering if Tudou wouldn't be the more successful of the two issues. Even though Tudou is No. 2 to Youku in market share currently, its reported numbers reveal that, unlike Youku, Tudou has been profitable in 2010. Tudou's offering will be led by Credit Suisse, which is very widely respected for its tech deals in China (although Youku was able to nab Goldman Sachs as its lead underwriter).
Eric Jackson says that you should look for other companies who will be valued from a 10-year potential revenue and profit stream projection, as Facebook was by Goldman Sachs. Eric owns YOKU and SINA.
By Eric Jackson Facebook is reported to have $2 billion in revenue this year. Google (GOOG -commentary - Trade Now) had $27 billion in revenue for the last 12 months. On the surface, it appears way out of whack that Facebook should have a valuation that's one-quarter Google's (which is just under $200 billion). The market must be wrong, some assume. Obviously though, the market believes that Facebook will grow at a much faster pace than Google over the next five years. The market believes that in five years, Facebook's revenue will be much bigger than $2 billon a year. This argument has been going on for some time, between the value investors who complain about a highflying stock with piddly revenue and profits, and the growth investors who argue that you need to look ahead. Amazon (AMZN - commentary - Trade Now) was the subject of such an argument for 10 years. It's clear now that the growth investors won that one. Just this morning, Morgan Stanley raised its price target on Amazon to $225 because it believes its revenue will triple from here by 2015. Amazon has gone up only 180x since its IPO close.
RealMoney Contributor
1/3/2011 5:00 PM EST
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The investment world is abuzz today with news that Goldman Sachs (GS - commentary - Trade Now) has made a $450 million investment in the popular social networking site Facebook, a deal that values Facebook at $50 billion. A few weeks ago, Facebook's private shares were reported to be trading on market exchanges such as SecondMarket and SharesPost at levels that valued Facebook at $56 billion. Some people didn't believe it -- or else they were on Christmas break and didn't pay attention. Several pundits said that a $56 billion valuation for the company wasn't real because Facebook wasn't trading publicly. "Wait until it goes public and there's real liquidity," the critics said.
After last night's news, those critics are going to have to face facts: Facebook's valuation is real, and Goldman's investment last night means that valuation will likely double in the next 12 months, whether or not there is a Facebook IPO. According to the New York Times article, Goldman is "considered one of Wall Street's savviest investors," so the value must be real! In all seriousness, though, Facebook's value is real, and people are just going to have to deal with it. Just because it's private and fairly new, the terminal value of the company is rich.
Eric Jackson says watch for a Renren IPO in early 2011: The Facebook/Groupon of China. Eric owns YOKU.
By Eric Jackson For example, over the last week, Dangdang has been attacked by two companies that want to enter into a price war with it. It's not surprising. After all, Dangdang is in the middle of its first quarter as a public company. All newly public companies like to come out of the gate strong during their first earnings call. Their competitors know that this success can start to feed on itself with investors and consumers alike. Therefore, why not try to short-circuit that positive feedback loop with a negative one? In other words, by entering in to a price war, competitors can make it appear that the new IPO is stumbling in its first earnings call, which can seed fear and doubt among investors and consumers. This, in turn, might position the competitors as "more successful." At the moment, Dangdang is being attacked by private Chinese company 360buy and American juggernaut Amazon (AMZN - commentary - Trade Now). 360buy (also known as Jingdong Mall) recently announced that it would spend RMB 80 million (approximately $12 million) on discounting prices prior to the peak holiday shopping season. This came after 360buy said a week ago that it would drop prices on its books by 20% in order to win business.
RealMoney Contributor
12/20/2010 5:00 PM EST
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China-based bookseller Dangdang (DANG - commentary - Trade Now) will go down in history as having one of the most successful IPOs of 2010. The company raised just under $300 million, was priced at $16 per share, opened at $24 per share and hasn't looked back. The stock topped out as high as $34 per share a couple of days after the Dec. 7 IPO, but it has since fallen significantly from that level. Still, shares of Dangdang are trading above their initial post-IPO level, giving investors who partook in the IPO a nice return.
Although TD Ameritrade recently said that Dangdang is one of the three most traded stocks at the moment (the others are Youku (YOKY - commentary - Trade Now) and Baidu (BIDU - commentary - Trade Now)), it's amazing to me that there is not more information about the company readily available in the U.S.
