Alibaba to kick off investor roadshow in New York this week
08 Sep 2014
Chinese e-commerce giant Alibaba will kick off its investor roadshow in New York this week eyeing a valuation of up to $200 billion in its hotly-anticipated IPO.
Analysts meanwhile are wondering whether Alibaba could soon overtake Amazon to emerge as one of the largest technology companies in the world.
The Guardian quoted Tomas Freyman, valuation expert and partner at accountancy firm BDO as saying Alibaba's revenues already exceeded that of eBay and Amazon combined. He added the company's IPO also secured China's entry into the tech stock major league.
Alibaba, which boasts 279 million active buyers and 8.5 million active sellers on its online platform, enjoys a number of competitive advantages over Amazon, according to Freyman.
He added, Amazon made its name retailing books, whilst Alibaba had always positioned itself as a national marketplace. Its model saw it generate revenues by taking a cut on every transaction. He said Amazon was still operating with a model more akin to traditional retailers, with customers serviced from 50 fulfillment centres worldwide.
But while Amazon had established a global footprint across a number of sophisticated digital markets, Alibaba primarily remained a Chinese enterprise at a time when internet penetration in China currently stood at just 50 per cent.
Meanwhile, according to Reuters, while retail investors generally got only 10-20 per cent of shares in big IPOs, and several advisers had told the news agency that though they expected a scramble from clients, so far there hadn't been tha many callers.
People were on Facebook, they knew it, but no one had ever heard of Alibaba, Bob Mecca, who had $175 million in assets under management, told Reuters.
Steve Quirk, senior vice president of the group serving active traders at discount broker TD Ameritrade Holding Corp, said the number of client inquiries about the Alibaba IPO was around a quarter of what they were for Facebook at this stage and about half of what it was for Twitter.
Alibaba's decision to price its shares between $60 and $66 per American Depository Share was indicative of the company not being too concerned about having a big US retail investor base, since retail investors preferred stocks that cost much less per share.
According to commentators the company could have raised the same amount of money by selling more shares at a lower price.
