Alibaba Goes To US Stock Market
Alibaba’s headquarters in Hangzhou, China
The Chinese e-commerce behemoth Alibaba http://topics.nytimes.com/top/news/business/companies/alibaba/index.html?inline=nyt-org Group filed paperwork on Tuesday in the United States to sell stock to the public for the first time, in an embrace of the global capital markets that represents a coming-of-age for China’s booming internet industry.
‘Alibaba is the fastest-growing internet company http://www.nytimes.com/interactive/2014/05/06/business/dealbook/from-netscape-to-alibaba.html in one of the fastest-growing economies in the world,’ said Sameet Sinha, an analyst with B. Riley & Company, a boutique investment bank in Los Angeles.
‘They are like an Amazon , an eBay http://dealbook.on.nytimes.com/public/overview?symbol=AMZN&inline=nyt-org and a PayPal.’ http://dealbook.on.nytimes.com/public/overview?symbol=EBAY&inline=nyt-org
In the filing http://www.nytimes.com/interactive/2014/05/06/business/dealbook/07alibaba-documents.html , Alibaba said it intended to raise $1 billion in an initial public offering-a figure used to calculate its registration fee.
But the company is expected ultimately to raise $15 billion to $20 billion, which would make it the biggest American I.P.O. since Facebook http://dealbook.on.nytimes.com/public/overview?symbol=FB&inline=nyt-org ‘s $16 billion offering in May 2012.
When it makes its debut on the New York Stock Exchange or the Nasdaq market, Alibaba is also expected to have a share price that could value the company at roughly $200 billion http://dealbook.nytimes.com/2014/05/06/big-profits-at-alibaba-but-filing-has-gaps/ — more than the market value of Facebook, Amazon.com or eBay, although still trailing that of Google http://dealbook.on.nytimes.com/public/overview?symbol=GOOGL&inline=nyt-org or Apple http://topics.nytimes.com/top/reference/timestopics/organizations/n/new_york_stock_exchange/index.html?inline=nyt-org . http://dealbook.on.nytimes.com/public/overview?symbol=AAPL&inline=nyt-org
The immense size of the offering means that Alibaba shares will probably find a home in a broad swath of mutual funds and pension funds — and thus indirectly in the portfolios of small investors around the world.
Wall Street has been eagerly awaiting the Alibaba I.P.O., seeing it as perhaps the best chance yet to buy into China’s growth.
Online shopping there is expected to grow at an annual rate of 27 percent, according to the iResearch Consulting Group, and Alibaba is the leader in that area.
In China, Alibaba’s brands are household names. It operates an online shopping center, Tmall, where global companies like Walt Disney , Apple, L’OrÃ©al, Nike http://dealbook.on.nytimes.com/public/overview?symbol=NKE&inline=nyt-org and Procter & Gamble http://dealbook.on.nytimes.com/public/overview?symbol=DIS&inline=nyt-org have set up virtual storefronts to sell products directly to Chinese shoppers. Another of its sites, Taobao, is aimed largely at small Chinese firms that want to sell items to Chinese consumers. http://dealbook.on.nytimes.com/public/overview?symbol=PG&inline=nyt-org
American companies like Google and eBay can only dream of making the kind of profit margin that Alibaba enjoys.
In the 2013 calendar year, Alibaba had net income of $3.56 billion on revenue of $7.95 billion. That translates into a profit margin of roughly 45 percent. In comparison, eBay mustered a 17.8 percent margin.
Alibaba has much higher profit margins than American Internet companies because its costs are low, analysts indicated.
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