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Shares in Chinese search engine Sogou rise only 4% after NYSE debut
Shares in Chinese search engine provider Sogou Inc. didn’t pop on their debut on the New York Stock Exchange Thursday after the company managed to raise $540 million in its initial public offering.
Sogou is a spinoff from Sohu.com Inc., the Chinese internet portal that itself floated on the Nasdaq exchange back in 2000. Sogou offers a variety of products in addition to its core search engine, including services that cover music, pictures, video clips, news and mapping, its own browser based on Google Chrome’s WebKit code base, and an input method editor that makes it easy for users to type using Chinese characters.
Notably, given potential news of a Snap Inc. takeover, Sogou’s largest shareholder is Tencent Holdings Ltd., the same company that was disclosed yesterday to have taken a 12 percent stake in the Snapchat messaging app maker.
The failure of the market to get more excited Sogou’s IPO and drive its share price further north is not fully clear, given that previous U.S. IPOs of Chinese tech companies have been popular. And Sogou certainly looks like a more sound company than many tech startups that have gone public this year: It’s actually profitable.
One theory for the flat IPO is the way the company is structured. Investors Business Daily noted that Sohu, Tencent Holdings and members of Sogou management will together have about 97 percent of total voting power, meaning that new investors into the company will have next to no ability to influence the direction of the company.
On the other hand, the fact that the shares didn’t rise could also mean that they were priced at what they’re worth, which means Sogou raised nearly the maximum amount possible rather than leaving money on the table.
Sogou isn’t the only large Chinese float this week, with China Literature Ltd., also part-owned by Tencent, going public in Hong Kong Wednesday. By contrast, it was oversubscribed multiple times over, raising $1.1 billion as shares surged 86 percent on the debut.
Shares in Sogou closed up almost 4 percent from the IPO price, to $18.50.
Image: Sogou/screenshot
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