By Charles Riley @CRrileyCNN April 21, 2014: 10:07 PM ET
http://money.cnn.com/2014/04/21/investing/alibaba-ipo/
Video in above link
HONG KONG (CNNMoney)
The tech company behind the largest and most-anticipated IPO of the year doesn't trace its roots to Silicon Valley, a Harvard dorm room or MIT lab.
Alibaba was founded 15 years ago in the modest Hangzhou, China apartment of Jack Ma -- a former English teacher who started the company with an initial investment of $60,000 kicked in by 18 friends.
The company has since evolved into the dominant force in China's e-commerce industry, a market with so much potential that Alibaba's IPO may be the largest ever by a tech company -- surpassing even the $16 billion raised by Facebook.
Alibaba is often described as a combination of Amazon (AMZN, Fortune 500) and eBay (EBAY, Fortune 500), with some PayPal sprinkled in to boot. But the shorthand fails to capture the breadth of the business model dreamed up by Ma.
By one estimate, almost four out of every five dollars spent online in China are spent in Alibaba's marketplaces.
On last year's Singles Day -- China's version of Cyber Monday -- sales on Alibaba's shopping sites clocked in at $5.7 billion, more than double America's Cyber Monday figure.
The company's top two e-commerce sites, Taobao and Tmall, attract more than 100 million unique visitors each day, on par with what Twitter (TWTR) reported before its IPO.
Unlike Amazon, the company does not sell directly to consumers. Instead, it allows users to search the merchandise offered by sellers in thousands of digital stores.
The website design is distinctly Chinese. Each page is crammed with products in an effort to mimic a crowded Chinese market. Buyers and sellers often use a built-in messaging service to chat with each other, and haggling over prices is standard.
Alibaba is more than its flagship marketplaces. It also runs a wholesale operation, a cloud computing business, and Alipay -- a digital payment service. In a first step into finance, the company has started to offer investment funds.
The scale of the business is massive -- and profitable.
Yahoo has a 24% stake in Alibaba, and its financial reports offer a peak at the company's earnings. Alibaba's sales rose 66% in the fourth quarter of 2013 versus the year prior, while earnings surged 110% to $1.4 billion. In the most recent quarter, Facebook (FB, Fortune 500) reported income of $523 million and Amazon earned $177 million. Twitter has yet to post a profit.
The results have led analysts to produce sky-high forecasts for Alibaba's valuation, with some reaching more than $170 billion.
One of Alibaba's biggest assets is Ma, who has stepped down as CEO but remains chairman of the company. He's a charismatic leader with a reputation for bold ideas.
Before founding Alibaba, Ma was twice rejected from a teaching college and was even turned away by a local KFC restaurant. But he has flourished as a tech executive, surviving a series of challenges from companies including eBay, which bought Chinese auction competitor EachNet in 2003.
Ma attributed his triumph in that case to Alibaba's home field advantage.
"I know the Chinese user market and users better than [former eBay CEO] Meg Whitman," Ma told the Wall Street Journal in 2005 as he stole market share from the American firm.
Now, Ma and other Alibaba stakeholders are eager to retain their control over the company, something that complicated its search for a suitable listing exchange.
Hong Kong is the preferred destination for many of China's top companies seeking to go public, but Alibaba chose to list in New York after Hong Kong regulators refused to allow the company's partners to appoint board members.
Other challenges are on the horizon, especially from rival Chinese firm Tencent, which has been spinning a web of mobile, telecom and online retail businesses that rank among the largest in the world.
It's best known as the operator of QQ, a desktop messaging service, and mobile messaging app WeChat.
Tencent is already public, and one of the best performing stocks of the past decade, increasing almost 13,000% since listing in Hong Kong in 2004. The firm now boasts a market cap of $125 billion -- more than McDonald's (MCD, Fortune 500) or Boeing (BA, Fortune 500). To top of page
"Then there was a woman, a lion of a woman."
Recent BABA News
- U.S. Index Futures Modestly Higher Before Key Economic Data Release; Early Closure for July 4th Holiday • IH Market News • 07/03/2024 11:01:33 AM
- MSME Day 2024: Alibaba.com Commits to Scaling AI Tools for MSMEs • PR Newswire (US) • 06/27/2024 11:00:00 AM
- MSME Day 2024: Alibaba.com Commits to Scaling AI Tools for MSMEs • PR Newswire (US) • 06/27/2024 11:00:00 AM
- Doordash and Deliveroo Terminate Talks; Universal Announces UK Theme Park Plan, and More News • IH Market News • 06/26/2024 11:08:35 AM
- AliExpress Launches New Global Advertising Campaign for Olympic Games Paris 2024 • PR Newswire (Canada) • 06/25/2024 06:00:00 AM
- AliExpress Launches New Global Advertising Campaign for Olympic Games Paris 2024 • PR Newswire (US) • 06/25/2024 06:00:00 AM
- AliExpress Launches New Global Advertising Campaign for Olympic Games Paris 2024 • PR Newswire (US) • 06/25/2024 06:00:00 AM
- UPS Divests Coyote Logistics in $1.025 Billion Deal with RXO, Under Armour Agrees to $434 million Settlement, and More News • IH Market News • 06/24/2024 11:00:20 AM
- Alibaba.com Teams Up with UEFA EURO 2024™ as Official B2B E-Commerce Partner to Elevate SME Success • PR Newswire (US) • 06/07/2024 01:00:00 PM
- Alibaba.com Officially Launches Alibaba Guaranteed: Making Global Sourcing as Simple as Online Shopping • PR Newswire (US) • 06/06/2024 10:00:00 AM
- Alibaba.com Officially Launches Alibaba Guaranteed: Making Global Sourcing as Simple as Online Shopping • PR Newswire (US) • 06/06/2024 10:00:00 AM
- AliExpress to Give Away Over 1,000 UEFA EURO 2024™ Match Tickets to Shoppers • PR Newswire (US) • 05/30/2024 07:00:00 AM
- AliExpress to Give Away Over 1,000 UEFA EURO 2024™ Match Tickets to Shoppers • PR Newswire (US) • 05/30/2024 07:00:00 AM
- Alibaba Group Announces Completion of US$5 Billion Offering of Convertible Senior Notes • Business Wire • 05/29/2024 11:30:00 PM
- iPhone Sales Skyrocket in China, Nvidia Surges in Pre-Market Following xAI Fundraising, and More News • IH Market News • 05/28/2024 11:37:48 AM
- Online B2B Spend on Sporting Products on the Rise Ahead of Sports-Fuelled Summer • PR Newswire (US) • 05/28/2024 09:00:00 AM
- David Beckham Unveiled as AliExpress Global Ambassador Kicking Off with the Launch of a UEFA EURO 2024™ Campaign • PR Newswire (US) • 05/27/2024 07:00:00 AM
- David Beckham Unveiled as AliExpress Global Ambassador Kicking Off with the Launch of a UEFA EURO 2024™ Campaign • PR Newswire (Canada) • 05/27/2024 07:00:00 AM
- David Beckham Stars In AliExpress Campaign for UEFA EURO 2024™ • PR Newswire (US) • 05/27/2024 07:00:00 AM
- Alibaba Group Prices US$4,500 Million Offering of Convertible Senior Notes • Business Wire • 05/24/2024 12:09:00 AM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 05/23/2024 08:04:58 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 05/23/2024 01:56:55 PM
- Alibaba Group Announces Filing of Annual Report on Form 20-F for Fiscal Year 2024 • Business Wire • 05/23/2024 01:40:00 PM
- Alibaba Group Announces Proposed Offering of Convertible Senior Notes • Business Wire • 05/23/2024 01:34:00 PM
- Form 20-F - Annual and transition report of foreign private issuers [Sections 13 or 15(d)] • Edgar (US Regulatory) • 05/23/2024 01:14:49 PM
Freedom Holdings Corporate Update; Announces Management Has Signed Letter of Intent • FHLD • Jul 3, 2024 9:00 AM
EWRC's 21 Moves Gaming Studios Moves to SONY Pictures Studios and Green Lights Development of a Third Upcoming Game • EWRC • Jul 2, 2024 8:00 AM
BNCM and DELEX Healthcare Group Announce Strategic Merger to Drive Expansion and Growth • BNCM • Jul 2, 2024 7:19 AM
NUBURU Announces Upcoming TV Interview Featuring CEO Brian Knaley on Fox Business, Bloomberg TV, and Newsmax TV as Sponsored Programming • BURU • Jul 1, 2024 1:57 PM
Mass Megawatts Announces $220,500 Debt Cancellation Agreement to Improve Financing and Sales of a New Product to be Announced on July 11 • MMMW • Jun 28, 2024 7:30 AM
VAYK Exited Caribbean Investments for $320,000 Profit • VAYK • Jun 27, 2024 9:00 AM