It was just last month that Indian Internet portal Rediff (NASDAQ:REDF) was soaring on possible takeover rumors. Its stock hit a high north of $26 a share, up 44% from the $18 mark it had been floating around for the first half of the year. Not too shabby for a company that's only recently begun turning a profit.

Since then, however, as company management has had to erase thoughts of a merger, shares have tumbled going as low as $15 a stub -- over a 70% reversal of fortune. Even with first-quarter sales up 18% and earnings increasing 6.5%, the stock has barely budged out of its recent slump. But has improved its standing as the 122nd most-visited spot on the Internet, according to So with a falling stock price and increasing visitors on the website, it sounds like the company may be beginning to look a bit more tempting.

But before you slake your thirst at the well, let's look to see if there's really a pail attached to the rope. You may just end up hanging yourself with it instead.

While Rediff far surpasses either the Times of India or the Hindustan Times in terms of online viewership, Rediff's traffic has been steadily decreasing throughout the year. Moreover, both Yahoo! (NASDAQ:YHOO) and Google (NASDAQ:GOOG) are still more popular Web destinations in India.

By comparison, Chinese portal Baidu (NASDAQ:BIDU) is China's top-ranked site while and (NASDAQ:SOHU) ranks in at No. 4. The Chinese iteration of Google and Yahoo! don't make an appearance till much further down the list. So while many may think Rediff could be India's next Baidu, it has yet to surpass the search engine giants of the world.

The key metric here, though, is online ad spending in India. Rediff's online ad revenue was only up 14% from the previous year, as the top 10 advertisers slashed their contribution to Rediff's site. The lone analyst covering the company realizes the company is hemorrhaging cash and has reduced his revenue estimates even as he reiterates his buy sentiment, all the while fomenting hope of a possible buyout. His research notes and even comments to Barron's have fueled the speculation of a white knight rescuing the investment, although management has seemingly squelched the possibility.

So even though Rediff's stock took a dive in the past few days, I still think it is trading a high premium, and any suitor would undoubtedly want to wait a bit for a better discount.

While India is an emerging market and Internet usage may become burgeoning soon, it's not being reflected in Rediff's viewer numbers, which have seen global Internet users drop 22% over the past three months. With a price-to-earnings ratio of almost 65 and a forward valuation in excess of 57, there's more than a lot of hope built into the stock's price.

The international investment landscape is not an arid wasteland by any means. Solid international opportunities abound for investors, as evidenced by the dozens of top companies uncovered by the Motley Fool Global Gains service. Yet rather than quenching their thirst, even at its current price, it looks like Rediff investors are mistakenly casting their pennies into a wishing well if they're hoping for a buyout to rescue them.

Go globe-trotting with these related Foolish articles:

Yahoo! Is a recommendation of Motley Fool Stock Advisor. Baidu is a recommendation of Motley Fool Rule Breakers.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.