* Shares close 11.9 percent below IPO price
* IPO of 6 mln American Depositary Shares priced at $29
* Price range was never cut, IPO was overpriced -analyst
(Adds analyst comment, updates with closing price)
By Clare Baldwin
NEW YORK, Aug 17 Shares of Chinese online video
company Tudou Holdings Ltd TUDO.O fell 11.9 percent in their
stock market debut on Wednesday and an analyst said the deal
had been overpriced.
Tudou was one of just a handful of companies to price an
IPO and begin trading amid tumultuous markets. However, after
pricing at the midpoint of the expected range the shares closed
their first day of trading at $25.56, or 11.9 percent below
their IPO price.
"It's very clear that they mispriced this offering," said
IPOfinancial.com President David Menlow. "The stock cratered
right at the (opening) bell."
Tudou priced an IPO of 6 million American Depositary Shares
at $29 on Tuesday.
The IPO price was the midpoint of a range that the company
set on Aug. 3, before some of the sharpest recent declines in
the S&P 500 index. The markets have since made up some of their
losses but are still below where they were on Aug. 3.
Many IPOs were pulled due to the declines and volatility.
Only two of the 12 IPOs scheduled for last week made it to the
market, and both raised less money than
"We've had a very tumultuous past two or three weeks. To
not see a repricing on a deal ... is noteworthy," Menlow said.
He added that Tudou was also losing money and investors are
still skittish about Chinese stocks after a string of recent
Tudou allows users to watch, upload, rate, comment on and
recommend videos and is similar to Google Inc's (GOOG.O)
YouTube and Youku.com Inc YOKU.N, another Chinese online
video company which came public in the United States in
China is the world's largest Internet market by users and
Tudou Chairman and Chief Executive Gary Wang said the most
important thing right now is keeping pace with the market's
"Audience, content distributors, and advertisers are all
driving towards a bigger scale so we believe at this stage it's
really crucial to scale up in terms of audience size,
advertising revenue and so on," he said.
"With scale ... content costs and bandwidth costs will be
easily leveraged," Wang told Reuters.
Tudou's registered user base and revenue have risen sharply
in recent years but its losses have widened. (For details on
Tudou's growth and finances, please see [ID:nN1E77F1QT].)
Underwriters on the IPO were Credit Suisse, Deutsche Bank
Securities and Oppenheimer & Co.
(Reporting by Clare Baldwin, editing by Gerald E. McCormick,
Dave Zimmerman and Bernard Orr)