Companies

China's Internet stocks lose luster

(China.org.cn)
Updated: 2011-05-18 14:23

From boom to bust, China's Internet companies listed on the US stock market have fallen to earth. Shares of Renren, Jiayuan and Netqin dropped below their offering prices just days after shining performances on their first day of trading.

Their slide suggests investors may have lost their taste for China's dot-com stocks. Is it a bubble?

Ahead of Renren's IPO, some American investor pointed out that the Chinese firm could hardly compare to Facebook in terms of user base and market share. They noted that Renren's offering price was unreasonably high given its financial fundamentals.

A story published in the latest edition of the Economist newspaper also warned American investors of the risk of buying internet stocks, especially those from China, as they face restrictions from Chinese law and policy.

Feng Po, an analyst at China Venture, cited Jianyuan as an example of an overvalued firm.

"The matchmaking Website is in fact small, doesn't have a new business model and lacks innovation," Feng said.

As investor exuberance cools, they have begun to think soberly about Chinese internet stocks and have come to understand what these companies really are, he added.