Counting down to Alibaba, Qunar gives China's IPO prospects another shot in the arm
Two more days, two more Chinese tech companies off to solid starts on the US public markets.
Online travel platform Qunar, whose closest US analogue is Kayak, went public on Nasdaq today, raising $167 million and seeing its share price almost double from its initial offering of $15 a share. By midday, its price was tickling $30. Search giant Baidu owns a majority stake in Qunar.
Qunar CEO CC Zhuang wasn't letting the positive outing go to his head. “I don’t even think an IPO is an achievement," he said in an interview, "it’s just a regular finance event.” Nor would he comment on the market conditions for fellow Chinese tech companies considering an IPO in the US. "For a good company, the market is always open," he said.
Qunar's outing comes the day after online classifieds company 58.com, China's answer to Craigslist, went public on the New York Stock Exchange, raising $187 million in the process. Since getting out the gate at a higher-than-expected $17 a share, 58.com's stock price has risen to about the $25 mark.
The back-to-back events are the latest in a series of encouraging signs for what looks like the beginnings of comeback for Chinese tech companies' IPO prospects. Last November, communications platform YY ended a Chinese IPO drought brought on by a series of accounting scandals and lackluster public-market performances with an offering that raised $81.9 million. It has since seen its stock price rise from $10.50 to $49.
Ecommerce retailer LightInTheBox has since gone public, too, but after an encouraging start in which it raised $79 million and saw an immediate jump in its stock price, it is now trading just below its initial offering price, at about $8.60.
Chinese companies that were already listed, however, have been on a tear of late, with 21Vianet, Baidu, Tencent, YokouTudou, Qihoo360, and VIPShop all seeing dramatic surges in their stock prices over the last 12 months.
The signs aren't all positive for Chinese tech companies, though. They still have their doubters, most prominent among which is the investment research firm Muddy Waters, which recently called online security firm NQ Mobile, which is listed on the NYSE, "a massive fraud." Much of NQ's reported revenue was the work of the company's imagination, Muddy Waters charged. Since the Muddy report was published, NQ's shares have fallen 37 percent.
Last year, Muddy Waters backed down from a similarly negative report on China's New Oriental Education, which has since performed strongly. It is today trading at about $26 a share, up from a five-year low of just above $11 in the immediate wake of the report.
The next major Chinese tech company to go public may well be ecommerce giant Alibaba, which looks increasingly like it will list in Hong Kong, despite earlier reports that the company's talks with Hong Kong's stock exchange had foundered. Alibaba's Tmall and Taobao online shopping sites enjoy more transactions than eBay and Amazon combined. Some analysts believe Alibaba's IPO will be more significant than Twitter's.
[Photo by © The Nasdaq OMX Group, Inc. 2013]