The Low Post News

Alibaba Preparing IPO in U.S.

This year’s largest Initial Public Offering will be from a company most people in the U.S. do not know anything about.

Alibaba, the e-commerce behemoth based in China that has revenue higher than eBay and Amazon combined, has decided it will go public in the United States, following months of speculation it could list its shares in Hong Kong.

The company might raise as much as $15 billion that would value the company at approximately $200 billion.

One Wall Street analyst said it was expected to be the largest IPO for a tech company ever, the largest of 2014 and the largest Chinese IPO for 2014. It was expected to be a record breaker by every metric.

The initial public offering for Alibaba will be the start of a wave of companies from China going public this year in the U.S. Weibo, a platform that is Twitter-like is scheduled to start trading Thursday on Nasdaq and a rival to Alibaba filed in January for a listing of $1.5 billion.

The prospect of an IPO blockbuster for Alibaba has ignited a frenzied investor interest similar to what swirled around the 2012 IPO of Facebook and the 2013 one for Twitter.

Alibaba often times is compared to PayPal and eBay, but it has much wider interests. Those interests include maps, banking, cloud computing, TV, film production and an online music service.

The company owns a stake of Weibo, the platform for microblogging that will go public this week.

In 1999, Alibaba was founded by 18 people led by a former Hangzhou English teacher Jack Ma. Yahoo invested early with the company and still maintains close to 24% of the business. SoftBank from Japan has a share of nearly 37%.

On Tuesday, when Yahoo reported quarterly earnings, it revealed that its revenue from Alibaba had surged by 66% to over $3.06 billion, during the fourth quarter in comparison with the same period one year earlier. Net income close to doubled to over $1.36 billion.

That would make the 24% stake Yahoo has worth more than $42 billion which is more than the market capitalization of Yahoo itself, according to an industry analyst.

The analyst said that in retrospect, Yahoo’s investment in Alibaba was smart, when Alibaba was small and Yahoo was not.

Now the dominance Yahoo once had is gone, and Alibaba is a global powerhouse.

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