The immense appetite for Baidu shares underscores the scarcity of and the hunger for growth stories in the U.S. as much as it reflects the global economic significance of China. Baidu, the Chinese search-engine operator that most everyone is calling the Google of China, opened at $66, well over its IPO of $27. It traded as high as $151, giving it a market cap of $5.1 billion. At that level, it's trading at 170 times this year's expected sales of $30 million. The bidding frenzy for this stock makes the Bay Area housing market look sane. The opening price made my earlier call or guess in my Net Sense colum look conservative. The point of the column still stands, however, and is even more on target, given the trading of Baidu shares. Investors are starved for growth. Fear of missing the only growth opportunity in months or years is a powerful motivator. And investors fear that demand will only get stronger and that Friday's price will soon look like a bargain, much as Google's $300 price today makes its $85 IPO price tag back in August 2004 look cheap. Even before Baidu opened, it traded at multiples of expected sales that were higher than Google's when its shares were offered in August 2004. I'm 99% certain that Baidu, unlike Google, won't be valued at $90 billion in a year. But Baidu is a lot like Google in that it represents one of the very few hyper-growth opportunities in the most lucrative and fast-growing online business we've witnessed: paid search. Moreover, it's paid search in a country that's just turning the corner toward becoming a consumption machine -- of both goods and ads.
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