Correction: An earlier version of the story incorrectly stated that Sohu (NSDQ: SOHU) had brought more shares. The company, in fact, sold more shares.
If the Changyou IPO is any indication, the potential of Chinese gaming companies is not lost on U.S. investors. The shares, which went public last week on the NASDAQ as CYOU, immediately jumped to $22 before settling in at $20 by the end of the day — a 25% gain over the IPO price of $16. While many IPOs tend to take a breather after a strong first day, the CYOU shares have continued strong, closing yesterday at $23.84, another 20% over the first day’s closing price.
Changyou announced today that it had closed the sale of the IPO shares and that Sohu, the company that spun off Changyou and still owns about 69 percent of the company,
bought sold an additional 1.1 million shares it wasn’t initially committed to buy, indicating Sohu believes demand will stay strong.
Chinese gaming companies and internet portals are drawing attention for their ability to monetize their audiences through creative methods beyond advertising, including virtual goods. Virtually of Changyou’s revenue comes from selling viritual goods within games. Other social networks are taking note: Hi5, struggling to make money and raise capital, said it would also turn to virtual goods as a source of badly needed revenue.