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Chinese company Alibaba could have a record-setting U.S. IPO

Chinese Company Alibaba Could Have A Record-Setting U.S. IPO


Chinese e-commerce company Alibaba filed paperwork Tuesday for what's expected to be one of the largest initial public offerings in history.

But before you start looking at ways to tie the name of the company to the main character of a Middle Eastern folk tale - as I have - let's start with the basics.

"Alibaba is an online marketplace where mostly Chinese companies and some Western companies sell their products to customers and other businesses," according to The New York Times.

Bloomberg says: "The Chinese company that's quite a combination, if you would, between Amazon, eBay and Google."

The man at the center of Alibaba is Jack Ma, a billionaire entrepreneur who's previously worked as an English teacher, according to ABC. So how did he become the Zuckerberg of China?

As Ma has probably told reporters hundreds of times by now, he went online for the first time in 1995 during a trip to Seattle. The Washington Post reports Ma "saw how little information existed about Chinese companies," so decided to build one of his own - although he says he doesn't know much about technology.

In 1999, he founded Alibaba. He and 17 other people started working out of his apartment and what do they have to show for it now? Ridiculous numbers.

Let's talk revenue and profit: Forbes says "Alibaba stated revenues of more than $6.5 billion on profits of about $2.8 billion" nine months into its 2014 fiscal year. The company also reported as many as 231 million active buyers in December of 2013.

The company that began in an apartment is now valued at upwards of $200 billion - Facebook's IPO valuation was $104 billion - and, according to Bloomberg, Alibaba is expected to raise more than $20 billion in its offering. That'll beat out Visa's $19.65 billion and Facebook, which had the largest tech IPO at $16.01 billion.

But why is a Chinese company doing a public offering in the U.S.? A senior analyst at Morningstar, an investment research firm, told Mashable, "By listing in the U.S. you open up the doors to a lot more potential investors. ... The U.S. listing will add a layer of creditability."

But Alibaba isn't the only company benefitting from the U.S. IPO. USA Today reports Yahoo acquired a 40 percent stake in Alibaba for $1 billion in 2005. Yahoo sold almost half of that for $7 billion in 2012. The company now owns almost a fourth of Alibaba, a share which could be worth billions of dollars following a very favorable IPO, according to USA Today.

Alibaba put down $1 billion as a placeholder for its paperwork filed with the Securities Exchange Commission. We won't know the exact amount Alibaba will raise until its IPO, which is expected later this year.

Join the discussion

1000|Char. 1000  Char.
twiggymonsterone May 07 2014 at 3:47 PM

Another pointless and useless piece of software/website, millions will invest in and loose millions more. How many pointless ways can we create to make money, only to cripple our economy. A virtual world.

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Barry May 07 2014 at 10:03 AM

I wouldn't invest in a Chinese company. They already have a lot of our business's and jobs. If they control an outstanding amount of money in the US, what can they do. Leave it up to your conscience and thoughts, lots of the men from Vietnam are stili lieing in bed with their legs gone from the war that was backed by the Chinese. I don't get it, who's winning the war?

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2 replies
harbor1000john Barry May 07 2014 at 10:35 AM

I agree with you 100%.................but unfortunately many SP500 companies do business with and get revenue from China, so if you own US stocks, it's a good chance you help China indirectly........

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1 reply
Sue harbor1000john May 07 2014 at 11:34 AM

And who started it all. CLINTON. HE SIGNED NAFTA AND THE MEXICANS SENT THE WORK TO THEM. AND BILLY BOY HAD HIS HANDS IN BANKS TOO.

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antfern Barry May 07 2014 at 11:17 AM

Corporations are people too remember.

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eugeneriggs May 07 2014 at 9:51 AM

Hey people, he is just a very smart English teaher following already brilliance and brilliant ideas from the West. Cut the guy some slack. If what he has is junk then what abut E-bay and Amazon?????????

I say more power to him, I wish I had his idea and his brains. Good luck and God bless
Teach.

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1 reply
dennislgrove eugeneriggs May 07 2014 at 10:43 AM

You are entitled to your opinion and I respect that but I also respectfully disagree.

America has to quit selling out to China. Who is America? You and I, not the government, not this or that, it's we the people that have to stop this trend!

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EDUARDO May 07 2014 at 9:50 AM

All of you bad mouthing this company and the Chinese are just afraid because of the reality that China is actually the top economist in the world and there is nothing that you can do about it. Wake up and smell the coffee!

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3 replies
D May 07 2014 at 9:46 AM

Isn't he that guy that is obsest with cloning himself
so there can be hundreds of him in one room?

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1 reply
Paul D May 07 2014 at 10:03 AM

If it's true we could use some of him too. BRAIN POWER

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vips85 May 07 2014 at 9:30 AM

How can you trust investing in China? This may be a great company on paper,
but with a stroke of the pen, China's top down Communist Party can nationalize
it and make your investment worthless overnight. Investing in the US is tough
enough but at least we have the rule of law and constitutional guaranteed rights
protecting our property and our pusuit of happiness.

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4 replies
Hollow318 May 07 2014 at 7:49 AM

No matter what we think of China politics, or US politics, there is money to be made. May as well get on the banwagon and scoop some up for myself, if I can get into this IPO with what little funds I have. Stretch a few bucks. I've seen too many of these new companies start off strong, slide down to barely nothing only to rise up and be profitable within a few months, a year.

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usapaydirt May 07 2014 at 7:47 AM

Chinese made products are good for the Chinese Consumer , However American made products are best for the American Consumer. When you buy foreign made products, you put your neighbor , brother, sister, friends and eventually yourself out of work, while padding the pockets of foreign billionaire importers. It's your Country so it's up to you as a Consumer whether were owned by foreign interest...

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2 replies
Charlie Deeee usapaydirt May 07 2014 at 8:17 AM

Dont blame the Chieese blame the unions for sending the jobs over their, Unions got greedy in ths counrty with wages and benefits The unions protect the wore of thr worse.

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2 replies
John Krikorian Charlie Deeee May 07 2014 at 8:30 AM

And the Unions support what political party ???????

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klstjs Charlie Deeee May 07 2014 at 8:43 AM

The unions may have problems but do you think China is doing what is right for the people ( there's or ours) and do you think the CEO's of these billionaire companies are not greedy. You need to get your head out of the sand and see what is happening. Would you want your children to work as slaves for the billionaires of the world.

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klstjs usapaydirt May 07 2014 at 8:36 AM

I absolutely agree, I wish more USA citizens would realise the impact they could have on our USA economy, enviroment and what is best for future generations of the world. We the consumer need to stand up to big business and make them do the right thing. Most billionares know they are abusing people and the enviroment for money/(corporate greed).

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danimoreko May 07 2014 at 7:32 AM

I'm in Brazil and buy as much as in the Ebay Ali. While the policy of Ebay is to sell quality products, Ali grew up selling a lot of fake Chinese-made products of dubious quality, violating property rights. It fact, the political opening did very well pro pocket of the socialists.

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gsscpprez May 07 2014 at 7:13 AM

For NINE years Yahoo has owned a large portion of this company and still holds almost 25% of it. So all of you saying it is going to fail must think the Geniuses at Yahoo are just plain stupid? In existence since 1995, 19 years and you think it's going to fail? Really? More dumb comments on AOL (A******s Of Life).

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