Baidu soars 400% on Nasdaq debut

Katherine Griffiths in New York
The Independent - United Kingdom; Aug 06, 2005

China's answer to Google " an internet search engine called Baidu.com " saw its shares soar more than 400 per cent yesterday on their first day of trading on the US stock market Nasdaq, valuing the Beijing-based company at $4bn (pounds 2.2bn).

Baidu's flotation was the most spectacular market entry since Google went public a year ago.

Baidu, in which Google owns a 2.6 per cent stake, is the sixth most visited website in the world. China is the world's second-biggest internet market and is expected to leapfrog the US next year to the No 1 slot.

The company's initial public offering sparked huge interest internationally. Even analysts who expected a strong market debut were surprised by the surge of its shares, which traded as high as $151.21 in New York, before closing at $122.54. Its American depository shares were priced at $27 overnight and started the day at $66.

Baidu, whose name comes from an ancient Chinese poem about a man in search of love, is five years old. Some analysts introduced a note of scepticism about its extremely high valuation, saying about a third of its traffic at the moment comes from users illegally downloading MP3 music files.

Google and Yahoo! are eyeing the fledgling market in China where e-commerce is still relatively underdeveloped, mainly because of a lack of effective payment channels. But Baidu.com remains the most popular search engine, while two other Chinese web veterans " Sohu and Sina " recently launched search engines.