, the maker of China's leading Internet search engine, mesmerized Wall Street yesterday as its stock more than quadrupled —...

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SAN FRANCISCO —, the maker of China’s leading Internet search engine, mesmerized Wall Street yesterday as its stock more than quadrupled — a dazzling debut driven by the company’s connections to Google as much as its own tantalizing potential.

The Beijing-based company’s shares closed at $122.54 on the Nasdaq Stock Market, a 354 percent gain from its initial public offering price of $27. That represented the biggest one-day gain since the final days of the dot-com when IPOs regularly soared.

The rapid run-up gave Baidu a market value of $4 billion — a lofty appraisal of a 5 ½ year-old company that only recently became profitable. Baidu earned $1.8 million on revenue of $13.6 million during the first half of this year.‘s market value is more than 2,000 times its 2004 profit. That compares with a ratio of 75 for Google and 70 for Yahoo.

The company’s price-to-earnings ratio “is sick,” said Enzio Von Pfeil, chief executive of Commercial Economics Asia.

The company’s management expects much bigger things as more of China’s vast population surf the Internet. More than 100 million of China’s residents surf the Web. Baidu has been able to pluck enough visitors from that audience to emerge as the world’s sixth-most trafficked Web site.

“I am very confident in the future of Internet search in China,” Baidu Chairman Robin Li said yesterday. “This is a very basic need for every consumer in China. We are very fortunate to be in this space.”

Googlemania played a major role in yesterday’s buying frenzy.

Like Google, Baidu — traded under the ticker symbol BIDU — so far has made most of its money from text-based ads that are tied to search requests and generate a commission whenever the commercial links are clicked on.

Drawn by Baidu’s potential, Google even paid $5 million last year for 749,625 of the company’s shares — a stake worth $92 million yesterday.

Google’s early ownership interest has convinced some investors that it will eventually buy Baidu for a lucrative price, although there has been nothing concrete to support that belief.

Memories of Google’s IPO may have provided Baidu with its biggest lift. Nearly a year ago, Google went public at $85 per share — a price that many investors viewed as inflated but now looks like a bargain with the company’s shares closing at $292.35 yesterday.

“This is a ‘son-of-Google’ investor mentality,” said David Menlow, president of IPO Financial, an industry newsletter. “Everyone remembers they could have had Google at $85 and don’t want to let it happen again.”

As the Internet becomes more ingrained in the everyday lives of the Chinese, it’s possible to envision Baidu duplicating the tremendous growth that Google has enjoyed, Killian said. Google’s market value now hovers around $85 billion — something that would have seemed unfathomable when Stanford University graduate students Larry Page and Sergey Brin launched the company seven years ago.

“There are a handful of companies where you need to dream,” said Linda Killian, a portfolio manager for an investment fund specializing in IPOs. “You have to think, ‘If everything were to go right for this company, what could they achieve?’ There are companies that could become the next Microsoft or Google.”

Baidu, pronounced “by-doo,” is named after a 900-year-old love poem.

Li, who worked in Silicon Valley for a couple of years and received his master’s degree in computer science from University of New York at Buffalo, formed the company with Eric Xu, who received a doctorate from Texas A&M.

Although Xu no longer works at Baidu, he was alongside Li yesterday to watch the company’s stock soar in its Wall Street debut. Li, 36, ended the day with a personal stake worth $920 million, but he said he won’t let the sudden wealth affect him. He can’t sell any of his stock for two years under restrictions imposed as part of the IPO.

“My passion is search and changing the lives of ordinary people with search,” he said.

Information on price-earnings ratio provided by Bloomberg News.