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Twas the Night Before Alibaba (BABA)

September 18, 2014 5:07 PM EDT

(Updated - September 18, 2014 5:24 PM EDT)

Alibaba (NYSE: BABA) priced its highly-anticipated IPO tonight at $68 per share, the high end of the expected $66-$68 range, according to reports from Dow Jones. Shares will open for trading tomorrow - Friday, September 19, 2014 - on the NYSE under the stock symbol "BABA." The China Internet phenom priced 320,106,100 American Depositary Shares (ADSs) in the offering.

The company is expected to have 2,465,005,966 shares outstanding following the offering, giving the company a market cap of $167.6 billion at the top end of the range. This compares to market caps of ~$65 billion for eBay (NASDAQ: EBAY), ~$150 billion for Amazon (NASDAQ: AMZN), ~$200 billion for Facebook (NASDAQ: FB) and ~$400 billion for Google (NASDAQ: GOOG).

Below is a host of important items to review and consider if your are investing in or planning on investing in the stock:

  • IPO Roadshow (must watch): http://retailroadshow.alibabagroup.com/index.html
  • IPO Prospectus (must read): http://www.sec.gov/Archives/edgar/data/1577552/000119312514341794/d709111df1a.htm
  • Pre-IPO Equity Research Coverage
  • Interesting comments from analysts:
    • "If AMZN, EBAY and GOOG were to have a baby, it would be Alibaba. Alibaba has the world’s largest GMV of any Internet retail service provider and 80%+ market share of China’s eCommerce market," CRT Capital's Neil Doshi said.
    • "Alibaba's success has been widely attributed to "C2C" i.e "Copy to China" Strategy, and this is the recipe for success of all Chinese Internet Companies, and works extremely well," Global Equities Research analyst Trip Chowdhry said. "However, the imitation strategy completely fails in the fast pace, completely open competitive International markets, where Innovation supersedes Imitation."
    • "Even though BABA already has a strong competitive moat for Chinese ecommerce, there is still a considerable market opportunity runway looking forward," Rosenblatt Securities Jun Zhang said.
    • Wedbush analyst Gil Luri sees gross merchandise volumes greater than Amazon and eBay combined. "Growth in Chinese e-commerce appears to have room to grow at 30%+ for several years based on low penetration and “leapfrogging” of offline commerce, especially in tier 3 and 4 cities," said Luria

Bull/Bear case as laid out by Triton Research (below, or here)

Financial Summary:

GMV generated on our China retail marketplaces increased by 55.8% from RMB1,077 billion in fiscal year 2013 to RMB1,678 billion (US$270 billion) in fiscal year 2014. Our total revenue increased by 52.1% from RMB34,517 million in fiscal year 2013 to RMB52,504 million (US$8,463 million) in fiscal year 2014. Our total revenue increased by 46.3% from RMB10,778 million in the three months ended June 30, 2013 to RMB15,771 million (US$2,542 million) in the same period in 2014. We do not allocate revenue among each of our China retail marketplaces. Our net income increased by 170.6% from RMB8,649 million in fiscal year 2013 to RMB23,403 million (US$3,772 million) in fiscal year 2014. Our net income increased by 179.6% from RMB4,448 million in the three months ended June 30, 2013 to RMB12,438 million (US$2,005 million) in the same period in 2014. For the three months ended June 30, 2014, our net income included a net gain of RMB6,251 million (US$1,008 million) from step-up acquisitions arising from revaluations of previously held equity interest.



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