Changyou.com IPO rides Wall Street’s rising tide
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Online game developer Changyou.com Ltd. picked a great day to launch its U.S. initial public stock offering.
Amid a broad market advance Thursday, investors bid the company’s new shares as high as $23.93 from the IPO price of $16.
The stock closed at $20.02 on Nasdaq, up 25%.
Changyou.com, which raised $60 million in the stock sale, is just the second IPO in U.S. markets this year.
Wall Street’s meltdown in January and February caused most IPO hopefuls to shelve their plans.
The only deal to be priced in the first quarter was from well-known infant-formula company Mead Johnson Nutrition, which was spun off from pharmaceutical giant Bristol-Myers Squibb.
Mead Johnson sold 30 million shares at $24 each on Feb. 10.
The stock has gained 14% since then, to $27.35 today.
Changyou.com is a unit of Sohu.com Inc., which bills itself as China’s leading online media company.
Of the 7.5 million shares issued in the IPO, half were from Changyou.com and half were from Sohu.com, which remains the controlling shareholder of Changyou.com.
Changyou.com is a developer of online role-playing games that can be played by millions of people simultaneously.
In China, Changyou.com has a hit on its hands with a martial arts game called Tian Long Ba Bu (Novel of Eight Demigods).
The company reported net income of $108 million last year on sales of $202 million -- and 94% of those sales were derived from Tian Long Ba Bu. The company said the game had 1.8 million active paying accounts at year-end.
Although Changyou.com says it has three new games in the pipeline, it’s still reliant for now on its one big hit, and “we cannot guarantee how long TLBB will continue to sustain its current level of popularity,” the company said in its prospectus for the IPO.
The Changyou.com IPO is the biggest U.S. offering by a Chinese company since Gushan Environmental Energy Ltd.’s $185-million deal in December 2007, according to Bloomberg data.
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