This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Youku Emerging a Goliath in China Internet

NEW YORK (TheStreet) -- After the all-stock merger between Youku (YOKU) and Tudou (TUDO) a couple of weeks ago, Youku's stock has receded from the $32 levels it hit the day of the deal announcement.

The stock is now back down at the $24 level -- and actually less than where it traded before the deal was publicized.

That seems a bargain considering that Youku's in a much stronger position today than it was then. (Tudou is still trading at $32, which is more than double where it traded before the merger.)

Consider these important facts:
  • China's Internet population just reach 513 million last year according to the government-run China Internet Network Information Center (CNNIC)
  • 56 million Chinese used the Internet for the first time in 2011
  • 60% of China's population remains offline at the moment
  • That means that all Chinese Internet sites are poised to benefit from increased Internet penetration over the next couple of years.

    However, Youku is in a unique position among Chinese Internet stocks.

    Youku was the second-largest video Web site in the world after YouTube with 4.6 billion videos viewed in October. This represented 2.3% of all videos viewed worldwide that month according to ComScore.

    Tudou is the No. 2 video site in China.

    By combining with Tudou, Youku now has a dominant position in the Chinese online video space, although some of the bigger portals like Baidu (BIDU), Sohu (SOHU) and Sina (SINA) could always spend a lot of money to beef up their presence.

    18 Dividend Stocks That Will Outlive the Hype

    For the last four months, Youku and Tudou had been engaged in a bitter legal battle over IP rights. They'd also been forced to bid for rights to different types of online content to increase traffic to their sites.

    The fight for content was not unlike what we saw in the world of satellite radio a few years ago with XM and Sirius (SIRI). Both had paid up handsomely for sports content rights and for on-air talent like Howard Stern, Oprah and Martha Stewart.

    Once the companies merged, however, the hunger for paying up for content went away. The two sides had already locked up a lot of the best content already. And, of course, by merging, they'd taken the No. 2 bidder out of the market for all future content.
    1 of 2

    Check Out Our Best Services for Investors

    Action Alerts PLUS

    Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

    Product Features:
    • $2.5+ million portfolio
    • Large-cap and dividend focus
    • Intraday trade alerts from Cramer
    Quant Ratings

    Access the tool that DOMINATES the Russell 2000 and the S&P 500.

    Product Features:
    • Buy, hold, or sell recommendations for over 4,300 stocks
    • Unlimited research reports on your favorite stocks
    • A custom stock screener
    Stocks Under $10

    David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

    Product Features:
    • Model portfolio
    • Stocks trading below $10
    • Intraday trade alerts
    14-Days Free
    Only $9.95
    14-Days Free
    Dividend Stock Advisor

    David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

    Product Features:
    • Diversified model portfolio of dividend stocks
    • Updates with exact steps to take - BUY, HOLD, SELL
    Trifecta Stocks

    Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

    Product Features:
    • Model Portfolio
    • Intra Day Trade alerts
    • Access to Quant Ratings
    Real Money

    More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

    Product Features:
    • Access to Jim Cramer's daily blog
    • Intraday commentary and news
    • Real-time trading forums
    Only $49.95
    14-Days Free
    14-Days Free
    YOKU $27.54 0.00%
    AAPL $95.03 0.21%
    FB $116.73 0.00%
    GOOG $691.02 0.00%
    TSLA $247.54 -0.07%


    Chart of I:DJI
    DOW 17,830.76 -210.79 -1.17%
    S&P 500 2,075.81 -19.34 -0.92%
    NASDAQ 4,805.2910 -57.85 -1.19%

    Free Reports

    Top Rated Stocks Top Rated Funds Top Rated ETFs