The much-anticipated IPO of Chinese gaming company Changyou didn’t disappoint, as investors bid the opening price to $22, a 40 percent premium over the $16 price tag placed on the shares sold to investors before trading began this morning. Trading volume was heavy, with over 3 million shares traded in the first 10 minutes. The original pricing range set a few months ago was $14 to $16 so the fact that it priced at the high end of the range indicated there was initial demand for the company’s shares, but investors who weren’t able to buy shares before they started trading on NASDAQ this morning clearly wanted in.
Chinese internet and gaming companies have received their fair share of attention recently for finding faster paths to growth and profitability than many of their foreign counterparts; Tencent, a leading Chinese internet company, recently announced it had sold nearly $1 billion in virtual goods last year while many internet companies struggle to survive on advertising. Changyou, a subsidiary of Chinese internet giant Sohu.com (NSDQ: SOHU), sold 7.5 million shares to the public.
Update: The stock fell back to earth a bit after the $22 opening, closing the day at just above $20 – still a good first day at 25 percent above the opening price of $16. Trading volume came back to earth as well – about 8.7 million shares were traded on the day after over 3 million were traded in the first ten minutes after the open.