Saturday, August 06, 2005
Posted by Roberto
12:30 AM
0 comments
BAIDU.COM IPO: 354 PERCENT GAIN!
Context
More than 100 million of China's residents surf the Web. Baidu.com, China's biggest Web search company, is the world's sixth-most trafficked Web site. During the first half of 2005, Baidu earned $1.8 million on revenue of $13.6 million.
August 5, NASDAQ IPO
The Beijing-based company's shares (BIDU) closed at $122.54 on the Nasdaq Stock Market, a 354 percent gain from its initial public offering price of $27.
The current market value of $4 billion is more than 2,000 times its 2004 profit. That compares with a ratio of 75 for Google and 70 for Yahoo.
Analysis
Investors valued Baidu more richly than Google, when comparing market value to last year's sales. Baidu's 2004 price-to-sales ratio was 279 -- based on revenue of $14.2 million -- well above Google's comparable multiple of about 26 -- based on revenue of $3.2 billion. How can investors justify Baidu at even five times greater valuation than Google (now up 244 percent from their IPO price) or Yahoo?
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