Andy Williams and Shirley Bassey both said it… “Where do I begin… and …How long does it last”… the 3 verses in between should be replaced with the news of the recent Alibaba IPO.
Alibaba has become the latest member to join the IPO-looza sweeping the globe. Founded in 1999 by Jack Ma, a former english teacher. His transition to the online world has proved fruitful, as Alibaba now has a monopoly of 80% of China’s ecommerce market. Known for its ‘all-encompassing retail ecosystem’ Alibaba ranges from payment systems to cloud computing all underpinning its main e-commerce platform.
Positioned as the world’s largest online and mobile commerce company, Alibaba said: “We aim to build the future infrastructure of commerce. We envision that our customers will meet, work and live at Alibaba, and that we will be a company that lasts at least 102 years.”
If this does come true, and you plan on seeing your 100th birthday. Invest now ….’good things come to those who wait?’ Unfortunately, it is a case of get in line. Whilst chinese consumer growth might excite us, Mr Ma has outrightly stated… “Alibaba put customers first, employees second and shareholders third”.
In an attempt to understand it and their pricing methods; Most of its revenue comes from online marketing, commissions on transactions and fees for its services. Despite Alibaba’s immense rapid growth in China. Recently soaring Amazon and Twitter stocks have seen slumping numbers as even some wall street virtuosos are figuring out the tangibility of certain companies…
Lets look at the numbers;
- Analysts expect the company to eventually raise an amount surpassing Facebook, garnering a market value of more than $160 billion.
- Alibaba’s own estimate of its valuation was between $96.9bn and $121bn
- 231m buyers last year, just shy of one-fifth of China’s total population,
- In the nine months to December 31, it generated revenue of $6.5bn and net income of $2.8bn
- Total gross merchandise volumes on its platforms exceeding $248 billion in 2013
- 19.7% of its business coming from phones or tablets.
Alibaba has also undertaken a series of investments. So far this year, from China’s largest video hosting site, Youku Tudou, to the US start-up Lyft, a car ride-sharing service, Alibaba are on a mission to strengthen an online presence with some tangible assets, providing some potential comfort to shareholders.
So what does the future of Alibaba hold? Beside the hype surrounding any IPO sending the share price into orbit. Our solace, mobile users account for more than 75% of all Chinese retail done, good news for us but what about everyone else? Jixun Foo an early investor sees more than meets the eye;
“You should think of them beyond an ecommerce player, just as Amazon is going beyond ecommerce to compete with Netflix, for example, in the so-called online video space,” said Jixun Foo, a partner at venture capital group GGV Capital, which had been an early investor in Alibaba. “They are testing the water on many fronts.”
This might be a re-assuring immediate statement, but today’s volatility within the tech scene is hardly comforting. At least they are planning on being around for 102 years. The title of a ‘founding shareholder’ might be a lovely sentiment at this stage but lets not forget the main point, will Mr Ma hand any shares over!