China's largest online video sharing site Youku announced its initial public offering of 15.8 million shares will begin trading on the New York Stock Exchange this Wednesday for US$12.80 a share.
Youku currently leads as China's number one video sharing site, with a 22.5 percent market share, according to Beijing-based research firm Analysys International. It is the tenth most visited site in the country, which has about 264 million Internet users who watch videos online.
Popular sites like YouTube and Hulu are either blocked or do not stream in China, allowing for domestic companies like Youku to fill the void.
But in spite of it's success, the Chinese company has yet to become profitable amidst dealing with high operational costs in order to host so many videos online. For the first nine months of 2010, the company recorded net losses reaching 167 million yuan ($25.1 million), an increase from 136.3 million yuan ($20.5 million) for the same period in 2009, according to the IPO filing.
Revenues for Youku, however, continue to increase, more than doubling to 234.6 million yuan ($35.3 million) in the first nine months of 2010, from the 99.8 million yuan ($15 million) during the same period last year. The company largely relies on online advertising for revenues.
Youku filed for the IPO last month to help fund the company's expansion by developing its technology and acquiring the rights to legally upload videos from film and television studios. While the company allows for users to upload their own content, about 70 percent of Youku's videos are from licensed content such as TV shows and movies.
The number of shares Youku is offering would allow the company to raise $202.8 million.