presentation.doc

IPO discount refers to the price of IPO shares was significantly lower than the price listed on the first day of trading. IPO discount prevailing in the countrys stock market. As for the baidu IPO,the discount is much higher than people expected. The issue price is 27 dollars, to close at 122.54 dollars,which rises353.58 percent. There are three mainreasons forthissituation. First of all,Baidu only issues 400 million American depositary receipts (ADS), well below the circulation needs of investors to buy.Second, wheninvestorslook atBaidu,they would like to compare it with google and think that Baidu will become Chinasgoogle. Again ,many investors are optimistic about the future development ofthe Chinese search market. Of course such a high IPO means that lots of money that should belong to baidu has being stolen . 440million shares, 39dollardrop,$ 170,000,000ah! Thebenefitisthatthe risk investors.The so-calledprice-earnings ratiois the rate of a stock share price and earings per share.It represents the size of investment risk and the lengh of payback period. The revenues of baidu in 2004 is 14 milliondollars,and the net profit is only 145 millon dollars.By the currentshare price, 122dollar,Baidusmarket valueis close to4 billion,While the dynamic price-earnings ratio is as high as 2400 times.In other words,if baidu make money at the current pace,(this is already a very high speed),Those US investors need to recover its cost 2450 years later. By comparison, Googleand Yahoosearningsareonly 70times. Baidusstock pricepositioning andmarketprices are different from other stocks. The stock market certainly exists artificially high,one can not help thinking ofthecoming of interbubble. Baidus revenuethis year,thereforemust beseveral timesbetter thanlast yearsgrowth in order to meetsuch a highprice-earnings ratio,if it is notthe case,Baiduwill face shares tumbling . Ifinvestors can notkeep a clear head, once thebubble bursts,will certainlysuffered heavy losses. In the co