A year ago, Youku.com (NASDAQ:YOKU) went public, surging a whopping 161% on its first day of trading.� At the time, the company was considered to be the �YouTube of China,� so what could go wrong?
As we�ve seen, a lot can happen in the tech world, especially when it comes to Chinese operators.� Since Yoku�s IPO, the stock has fallen a gruesome 40.8%.
Unfortunately, investors got even more bad news on Thursday.� The stock plunged nearly 20% because of its third-quarter report.
On its face, the report wasn�t particularly negative.� Revenue almost doubled to $41.2 million and the company lost a reasonable $7.4 million.� But in August, the company had been forecasting revenue growth of 110% to 120%.
The Chinese Internet market � especially in areas like video and social networking � is in the nascent stage.� At the same time, the competitive environment is brutal.� Large companies like Baidu (Nasdaq:BIDU) and Sina (Nasdaq:SINA) have the resources to aggressively enter new markets.�
In other words, it makes it extremely tough for investors to get any sense of stability.� And this can be a killer for stock prices.
Just look at Renren (Nasdaq:RENN), which has its own nickname as the �Facebook of China.�� The company�s recent quarterly report also disappointed and its stock price plunged.�
Here�s a rundown on the after-market performances of recent Chinese tech IPOs:
| Company | Return |
| Renren | -73% |
| Tudou Holdings (Nasdaq:TUDO)� | -45% |
| Dangdang (Nasdaq:DANG)� | -81% |
| Qihoo 360 Technology (Nasdaq:QIHU) | -43% |
Ugly.�
While valuations are much more attractive, it�s probably still a good idea to avoid the sector for now.� With such big-time losses, it can take quite a while for things to get better.
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