Baidu.com IPO

Baidu.com is the best performing IPO in 5 years, and the best ever foreign IPO on the Nasdaq.

Now that Google's stock has done so well, we have people who are looking for the next opportunity to get a quick return. I had every expectation that this stock would jump significantly from it's IPO issue price, but it is way overpriced now. It was issued at $27, first trades were around $60, peaked at $150 intraday, and ended the day near $125 for more than a 350% increase.

Investors who have bought the stock later in the day stand to lose quite a lot of money. I predict the stock will be under $100 by the end of the year.

The excitement over this company reminds me of the late 1990s when any internet stock was valued regardless of their business. Baidu.com is profitable, unlike many of the companies in the late '90s, but the company is not worth $???.

The company released just over 4,000,000 shares of stock to trade. On it's IPO day 22,500,000 shares were traded. That is an average of each share being traded 5.5 times. The total shares owned is 32,000,000, which gives the company a $4,000,000,000 valuation, even though they only had revenue of about $8,000,000.

Many people have said that this Baidu.com will be the Google of China. But very few have pointed out that Google will be one of their main competitors, along with other search powerhouses such as Yahoo.com and Microsoft. All three of these companies have significantly more money and resources to compete with Baidu.com in China.

Twenty percent of Baidu.com traffic is for MP3 searches. This is not necessarily a problem, but if China tells them to stop indexing MP3s, then they will lose a significant amount of their site hits.