Alibaba: What is Alibaba Exactly?[/b]
The Chinese e-commerce behemoth Alibaba 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 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 and a PayPal. In the filing, 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’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 more than the market value of Facebook, Amazon.com or eBay, although still trailing that of Google or Apple.
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. Yet the offering will also divulge a company that is relatively unknown in the West and whose complex web of businesses and dealings may put off potential shareholders. Alibaba warned prospective investors that Chinese laws and regulations are difficult to understand and predict. In addition, the prospectus says that Alibaba’s management and major shareholders will control the board, giving ordinary shareholders no power over the direction of the company. In China, Alibaba’s brands are household names. It operates an online shopping center, Tmall, where global companies like Walt Disney, Apple, L’Oréal, Nike and Procter & Gamble 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.
The company’s digital payment affiliate, Alipay, not only handles transactions on its sites, but is also widely used as a mobile payment system on cellphones in China, much as credit cards are used in other countries. It handled $519 billion worth of payments last year. Last year, the value of all merchandise sold on Alibaba exceeded $248 billion, more than the volume on eBay and Amazon combined. In the last three months of last year, nearly 20 percent of the purchases on Alibaba were made through mobile phones.
In 2008, Alibaba doubled down on its bet on the Chinese consumer with Tmall.com, a retail site where both local and international brands could set up virtual stores to market products directly to Chinese shoppers. With Tmall, Alibaba takes a cut of the transaction value, tying its profit directly to retail sales volumes.
The Chinese e-commerce behemoth Alibaba 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 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 and a PayPal. In the filing, 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’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 more than the market value of Facebook, Amazon.com or eBay, although still trailing that of Google or Apple.
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. Yet the offering will also divulge a company that is relatively unknown in the West and whose complex web of businesses and dealings may put off potential shareholders. Alibaba warned prospective investors that Chinese laws and regulations are difficult to understand and predict. In addition, the prospectus says that Alibaba’s management and major shareholders will control the board, giving ordinary shareholders no power over the direction of the company. In China, Alibaba’s brands are household names. It operates an online shopping center, Tmall, where global companies like Walt Disney, Apple, L’Oréal, Nike and Procter & Gamble 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.
The company’s digital payment affiliate, Alipay, not only handles transactions on its sites, but is also widely used as a mobile payment system on cellphones in China, much as credit cards are used in other countries. It handled $519 billion worth of payments last year. Last year, the value of all merchandise sold on Alibaba exceeded $248 billion, more than the volume on eBay and Amazon combined. In the last three months of last year, nearly 20 percent of the purchases on Alibaba were made through mobile phones.
In 2008, Alibaba doubled down on its bet on the Chinese consumer with Tmall.com, a retail site where both local and international brands could set up virtual stores to market products directly to Chinese shoppers. With Tmall, Alibaba takes a cut of the transaction value, tying its profit directly to retail sales volumes.