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Chinese localization company iDreamSky goes public on Nasdaq
Chinese localization company iDreamSky goes public on Nasdaq
August 8, 2014 | By Mike Rose

August 8, 2014 | By Mike Rose
More: Smartphone/Tablet, Business/Marketing, China

Newsbrief: iDreamSky, the Chinese company best known for localizing Western games for the Chinese market, has floated on the Nasdaq Stock Exchange and raised more than $115 million in its first day.

As reported by China Daily, iDreamSky launched 7.7 million shares as part of its initial public offering today, priced at $15 each. Under ticker symbol DSKY, the shares closed at $15.94, up 6.3 percent on the initial price.

The company plans to use more than $80 million of this money raised to explore potential future acquisitions. iDreamSky currently has around 100 million monthly active users, across nearly 40 mobile games, including Chinese localizations of Temple Run, Fruit Ninja and Subway Surfers.

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Michael Joseph
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"..has floated on the Nasdaq Stock Exchange and raised more than $115 million in its first day."

Stock purchasers of DSKY need to have their heads examined.

I get offering stock to gain access to capital that would otherwise take your company 5-10 years to raise - time that would potentially give a more aggressive competitor time to raise capital investment of their own and use it to outgrow and out compete.

But here we're seeing companies selling out for just 2-3 years worth of future earnings to compete in an already highly competitive market. That's not a good sign. The earnings for just 2-3 years out are already way too unpredictable.

Contrast this with a company like Microsoft that had their IPO in 1986 selling 3 million shares at an initial price of $21.00 at a time when the PC industry was still in it's infancy and raising money to ensure one could stay ahead of any known or unknown competitors was very important because the future rewards 10 years down the line could be ginormous.

And it's still a good litmus test to apply when you're looking to invest in an IPO. Do you believe this company is going to be a dominant "first in" player in a new class of industry with incredible potential over the next 10 - 15 years?