January 23, 2015 Comments Off on Weekly Featured Company: Alibaba
From a tiny startup founded by Jack Ma in his apartment in Hangzhou, China in 1999, Alibaba is now one of the biggest B2B ecommerce companies in the world. Inspired by the story of “Ali Baba and the Forty Thieves,” Jack Ma chose the name Alibaba to bring to mind the famous line “Open sesame,” an incantation that grants exclusive access to treasures. The Alibaba platform aims to open a doorway of fortune for small businesses worldwide. Due to its dominance in China’s internet and logistics space, with over 600 million subscribers and nearly $250 billion of annual transactions, it’s no surprise that Alibaba quickly rose to become one of the world’s biggest businesses. In September 2014, the company smashed records with the largest public offering in US history. Alibaba’s IPO attracted $21.8 billion, surpassing Facebook’s $16 billion in 2012. So how did Alibaba achieve this success? According to Forbes.com, Alibaba partly owes its success to Yahoo’s former CEO Jerry Yang, who invested $1 billion in the company in 2005 in exchange for 40% stake. Yahoo’s massive investment gave Alibaba the resources to boost its presence online. Included in the deal was Yahoo’s consumer marketing expertise and IP valued in the millions. Yahoo today, in exchange, enjoyed a windfall netting at tens of billions of dollars.
September 22, 2014 Comments Off on Yahoo’s true value?
Last Friday, Alibaba, the Chinese ecommerce giant, closed on the New York Stock Exchange at $93.89 or 38% percent higher from its IPO price. Alibaba raised a record-breaking $21.8 billion and the company’s valuation closed at $237.7 billion. Yahoo, which sold more than 120 million of its 524 million shares, made $8.27 billion and still has remaining stake in the company valued at around $38 billion. So how did Yahoo’s shares dip 2.7% during Alibaba’s first trading day? Analysts are suggesting that investors previously bought Yahoo shares as a way to own a piece of Alibaba. Yahoo was always seen as a temporary stock for many of these investors as they waited for the sought-after Alibaba IPO. Now that Alibaba is available to investors, the market in particular those Alibaba investors, have begun reviewing Yahoo’s core business. Yahoo has been struggling for years, and if its revenue growth is not rectified soon, the value of its core business may sink even further.
September 19, 2014 Comments Off on The Alibaba Fever
It’s all about supply, demand and control. Alibaba is about to flood the market with 310 million shares and investors are scrambling to get a piece of the Chinese giant. Some investors are selling their shares in other companies so they can invest in Alibaba. It’s going to be a day of frenzied trading and the world will surely watch with bated breath. According to news sources, control of the company will remain with its founder Jack Ma, along with his twenty-plus trusted Chinese managers dubbed as the “Alibaba Partnership”. This group has the authority to elect its own board members, a clause that was unacceptable when they were assessing Hong Kong’s stock market. Alibaba says that this structure is intended to ensure control and creative vision of the company. It remains to be seen if investors and indeed the market will respond positively to these control provisions.
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