Alibaba
ALI FARHOOMAND
rP os t
HKU776
ALIBABA.COM
op yo China is a place where miracles are made.
- Jack Ma, founder and chairman of Alibaba Group1
tC
On 6 November 2007, Alibaba.com debuted on the Hong Kong Stock Exchange, raising
US$1.5 billion to become the world’s biggest internet offering since Google’s initial public offering (“IPO”) in 2004. A frenzied purchase of the stock pushed prices up by 193% on the first trading day, making it the fourth-largest first-day gain in Hong Kong’s stock exchange in three years. The closing price of US$5.092 per share valued Alibaba.com at about US$25.6 billion, making it the fifth-largest among global internet companies and the largest in Asia outside Japan. It also made the company’s stocks among the most expensive in Hong Kong, 3 trading at 306 times the projected 2007 earnings of US$83.6 million.4 In contrast, Yahoo, a globally recognised dotcom brand that held a 39% stake in pre-IPO Alibaba.com, and Japan’s
Softbank, which owned 29.3% of Alibaba.com prior to the IPO, traded at only around 60 times their projected earnings. In other words, shareholders had displayed extreme optimism about Alibaba.com’s earning prospect by paying a significant premium to own the company’s shares. No
Barely a week after the IPO, Alibaba.com was already reported to be in talks with Softbank to set up a joint venture in early 2008 in Japan. Although the Japanese telecom giant disclosed no details regarding the venture, it was likely that Alibaba.com would expand its service to mobile users in Japan, a market that had been impenetrable to the Chinese e-commerce company.5 On the home turf, parent company Alibaba Group had already proven its mettle by topping EachNet, an older rival backed by global leader eBay.6 Founder and chairman Jack
Ma had made it his aim to make the Alibaba Group one of three largest internet companies in
1
2
3
4
5
Do
6
Kwong, R and Mitchell, T (7 November 2007) “Alibaba Shares Soar on First Day of Trading”,
rP os t
HKU776
ALIBABA.COM
op yo China is a place where miracles are made.
- Jack Ma, founder and chairman of Alibaba Group1
tC
On 6 November 2007, Alibaba.com debuted on the Hong Kong Stock Exchange, raising
US$1.5 billion to become the world’s biggest internet offering since Google’s initial public offering (“IPO”) in 2004. A frenzied purchase of the stock pushed prices up by 193% on the first trading day, making it the fourth-largest first-day gain in Hong Kong’s stock exchange in three years. The closing price of US$5.092 per share valued Alibaba.com at about US$25.6 billion, making it the fifth-largest among global internet companies and the largest in Asia outside Japan. It also made the company’s stocks among the most expensive in Hong Kong, 3 trading at 306 times the projected 2007 earnings of US$83.6 million.4 In contrast, Yahoo, a globally recognised dotcom brand that held a 39% stake in pre-IPO Alibaba.com, and Japan’s
Softbank, which owned 29.3% of Alibaba.com prior to the IPO, traded at only around 60 times their projected earnings. In other words, shareholders had displayed extreme optimism about Alibaba.com’s earning prospect by paying a significant premium to own the company’s shares. No
Barely a week after the IPO, Alibaba.com was already reported to be in talks with Softbank to set up a joint venture in early 2008 in Japan. Although the Japanese telecom giant disclosed no details regarding the venture, it was likely that Alibaba.com would expand its service to mobile users in Japan, a market that had been impenetrable to the Chinese e-commerce company.5 On the home turf, parent company Alibaba Group had already proven its mettle by topping EachNet, an older rival backed by global leader eBay.6 Founder and chairman Jack
Ma had made it his aim to make the Alibaba Group one of three largest internet companies in
1
2
3
4
5
Do
6
Kwong, R and Mitchell, T (7 November 2007) “Alibaba Shares Soar on First Day of Trading”,