Alibaba IPO will Rank the Chinese Giant Second to Google!
Alibaba IPO news continues to intrigue investors, journalists and analysts alike. The Chinese e-commerce giant is expecting to list in the New York stock exchange later this year. According to its filing, the company was seeking to raise $1 billion. However, emerging news indicate that the company and its bankers are considering adding new shares to also raise funds for some of its shareholders. This will make this company the second most valuable internet company, trailing only Google Inc. (Nasdaq: GOOGL).
With an approximately value of $168 billion (according to Bloomberg), the Hong-Kong based e-commerce company is looking to offload 12% of the stake through the IPO.
Alibaba IPO Valuation
Alibaba’s valuation puts it in the league of elite. The firm’s $168 billion market cap will dwarf Facebook Inc.’s (Nasdaq: FB) $148 billion, and will be $33 billion shy of the combined value of its two main rivals Amazon.com Inc. (Nasdaq: AMZN) andeBay Inc. (Nasdaq: EBAY). The two U.S.-based e-commerce companies are valued at $136 billion and $65 billion respectively.
However, Alibaba IPO valuation will still make it only a fraction of tech giantApple Inc. (Nasdaq:AAPL), which is valued at $508 billion, or Google valued at $356 billion.
History in the Making
The much awaited Alibaba IPO is slowly taking shape to be the greatest tech debut in history. Facebook still holds the record of the greatest tech company debut with its $16 billion offering.
Jack Ma’s firm, often inferred to be a combination of Amazon and eBay, will also to go into the records as the largest U.S. IPO ever if it smashes the $19.65 billion record set by Visa Inc. (NYSE:V) on March13, 2008.
Additional shares would mean that Alibaba IPO also could potentially overwhelm Agricultural Bank of China (ICBC) initial public offer as the largest ever. The latter raised $22.1 billion in Shanghai and Hong Kong stock markets.
Alibaba’s Business and Market
Alibaba, which controls about 76% of China’s mobile e-commerce market and 80% of the whole e-commerce market, basically operates an online shopping mall like Amazon, an online marketplace for consumer to consumer and business to business trades like eBay, a group buying platform called Juhuasuan, and an online payment platform similar to Paypal. Its gross sales from its top three sites totalled to $248 billion, with approximately 20% of this being initiated from mobile devices.
Alibaba’s Amazon version is known as Taobao while its eBay version is Tmall. The two platforms are very profitable such that in the year 2013, they contributed to 70% of all package deliveries made in China. The Taobao platform has over 800 million product listings with over seven million sellers.
The company is set to acquire 18.5% stake in China’s YouTube, Youku Tudou. Last month it launched Yu Le Bao, a service for film investment that allows people to micro-invest in upcoming movies. This is addition to at least seven other acquisitions. Alibaba’s founder and executive chairman Jack Ma believe this expands the firm’s ecosystem by bringing in new products and services to their customers.
In China alone, Alibaba has a huge e-commerce market, but which is still growing. The e-commerce retail contributes to about 8% of the total retail business in China, and of all the internet users, only 49% are active online shoppers. This follows that Alibaba can still convert more internet users into frequent online shoppers.
While Alibaba IPO price and date are still not known, they are much at stake as investors, journalists and analysts await this IPO. It is expected to happen in the last quarter of this financial year. In the mealtime, all stakeholders are keeping their eyes and ears open.