Chinese e-commerce giant Alibaba Group is relatively unknown in the U.S. But that’s about to change.
The company’s filing, its official signal of intent to go public, offers a peek inside the company that controls roughly 80 percent of China’s online commerce market.
The valuation game
Recent estimates have valued Alibaba between $150 billion to $200 billion. That suggests the planned IPO could raise up to $15 billion, making it one of the biggest Internet IPOs since Facebook’s listing in 2012.
Alibaba’s estimated worth on the low range is based on some synthetic securities to a higher estimated value, suggested by bullish analysts, who are comparing it to other highly valued Internet stocks, the Financial Times reports.
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John Sculley, former chief executive of Apple, recently told CNBC that the Chinese e-commerce giant is the “hottest thing in high tech right now.”
Alibaba.com is part of the Alibaba Group, founded in 1999 by Jack Ma, a former English teacher from Hangzhou, China. Alibaba.com first became profitable in 2002. Alibaba Group’s other platforms include Taobao, Tmall and Alipay. The latter is an online and mobile payment platform.
A big annual event for Alibaba occurs on Nov. 11, when the company conducts a huge online shopping sale that coincides with “Single’s Day” in China. That’s when young Chinese lament or celebrate being single.
The most recent Single’s Day generated some $5.7 billion in sales, even though only a fraction of Chinese shoppers have broadband access, said Anthony Scaramucci, founder of SkyBridge Capital, on a recent “Closing Bell.” “It just shows you the power of this brand. I think this thing trades through the $200 billion market cap number, that’s our opinion.”
Looking ahead, Alibaba’s growth strategy includes appealing to consumers—outside China—and familiarizing the globe with its brand, and site offerings.
A virtual bazaar of stuff, Alibaba’s platforms allow consumers and businesses to buy and sell virtually anything from luxury leather jackets to prefabricated container homes.
“Alibaba has a better business model than Amazon, because Alibaba doesn’t have anything invested in inventory,” said Bert Dohmen, president of Dohmen Capital Research on “Closing Bell.” “So in a recession they can withstand it much better than a company like Amazon.”
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—By CNBC.com staff