The Alibaba IPO was officially filed earlier this month, and analysts estimate that the deal could be the largest initial public offering in U.S. history.
Bloomberg has estimated that the Hong-Kong based e-commerce firm could be valued as high as $168 billion and will be selling a 12% stake in the company through the IPO. That means the company would raise $20.16 billion through its IPO.
That total would outpace the largest U.S. IPO to date, Visa Inc. (NYSE: V), which raised $19.65 billion when it hit the market on March 13, 2008. General Motors Co. (NYSE: GM) checks in at No. 3 on the list, having raised $18.14 billion in its 2010 IPO.
With a valuation of $168 billion, Alibaba will still be smaller than Apple Inc. (Nasdaq: AAPL) and Google Inc. (Nasdaq: GOOG, GOOGL), which have market caps of $508 billion and $356 billion, respectively. However, Alibaba’s market cap will be bigger than Facebook Inc.’s (Nasdaq: FB) $148 billion, Amazon.com Inc.’s (Nasdaq:AMZN)$136 billion, and eBay Inc.’s (Nasdaq: EBAY) $65 billion.
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The valuation may be huge, but it’s warranted.
“Alibaba is among the top three Internet operations in China, the world’s second largest economy,” Wired‘s Ryan Tate wrote recently. “According to its filing, the company pulled in $5.6 billion in revenue and $1.4 billion in profit last year. Gross sales from its three largest sites – Taobao (similar to Amazon), Tmall (similar to eBay), and Juhuasuan (group buying) – totaled $248 billion. And nearly 20% of its business comes from mobile devices, which means it oversees about 76% of China’s mobile e-commerce. The company claims 231 million active buyers and 8 million active sellers across all its sites, and it’s growing at a rapid clip. Revenue spiked 72% last year, according to [the securities] filing.”
Investors will continue to receive updates on the IPO price as the Alibaba IPO date approaches. Most are expecting the initial public offering to take place in late 2014.
Will you be investing in the Alibaba IPO? Let us know on Twitter @moneymorning using #Alibaba.
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