SINA (Nasdaq: SINA) apparently smells an opportunity in a busted IPO.

Reuters is reporting that the popular Chinese portal is making a $30 million to $40 million investment in Chinese video-sharing website Tudou (Nasdaq: TUDO).

Unlike last week's frazzled IPO buyers, SINA was smart to wait.

Tudou went public at $29 on Wednesday. It had shed a little more than a third of its value -- dropping all the way to $19.29 -- by Friday's close. It's naturally trading higher on today's model-validating news.

Buying into fast-growing but profitless video-streaming sites in China appears to be a hot trend. Shares of Youku.com (Nasdaq: YOKU) temporarily popped higher last week on speculation that Tencent was buying a stake in the site.

It's important to point out that Youku and Tudou may be two of China's most popular video-streaming sites, but their models are very different. Youku relies mostly on licensed content that it pays for. Tudou is a more conventional video-sharing site where users upload clips. In short, Youku is a close match to Hulu while Tudou is a lot like YouTube.

The one thing that Tudou and Youku do have in common -- beyond going public over the past year -- is that they are both losing money. It's not easy turning a profit by serving up chunky video files for free given what advertisers are willing to shell out for marketing at this point.

Tudou is no slouch. It has 90.1 million registered users, attracting 200 million unique monthly visitors. Unfortunately, all of that traffic -- and a devoted user base that uploads an average of 47,000 videos a day -- was only good for a deficit on just $17.8 million in revenue for its latest quarter.

It's intriguing to see Tencent and SINA reportedly snapping up stakes in the leading Chinese video sites. Most of the country's dot-com darlings -- including Baidu (Nasdaq: BIDU), Shanda Interactive (Nasdaq: SNDA), and NetEase.com (Nasdaq: NTES) -- are called out in Tudou's prospectus as competitors. SINA is also singled out in what appears to be growing into a cutthroat market.

The opportunities are certainly there. Sohu.com (Nasdaq: SOHU) reported a 150% spike in revenue at Sohu Video for its latest quarter. Sohu remains profitable -- and growing -- though adjusted net margins did slip slightly during the period, likely in part as a result of the success of its video channel.

If reports of these small stakes hold up, it will be interesting to see if outright acquisitions follow. Crowded yet fast-growing realms cry for consolidation, and we may be getting there now that underwriters and investors are likely to pass on future video-streaming website IPOs in the wake of last week's Tudou disaster.