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As expected, China's Internet giant Alibaba filed for an Initial Public Offering (IPO), which is considered to be o...
As expected, China's Internet giant Alibaba filed for an Initial Public Offering (IPO), which is considered to be one of the greatest in history and a possible rival to Silicon Valley's tech giants. Alibaba is often defined as a combination of eBay, Amazon and Google. Upon its entrance in the U.S. stock market, it will be valuated somewhere between $150 to $200 billion, rating this company above Facebook and Amazon.
A prosperous IPO will give the company the possibility to avoid rivals in China, dream big about future tech trends, expand its global power and encourage other Chinese companies to make IPOs in the U.S.
"eBay, Amazon and Google (should) be scared," said Matthew Turlip, an analyst with PrivCo financial group. "I think Alibaba is definitely going to be a major player. There's no reason for them not to go after the U.S. market. It's not a matter of if, but when."
The amount of money that Alibaba expects to raise is not detailed in its IPO, but some experts expect $15 billion to $20 billion, breaking Facebook's record $16 billion IPO in May, 2012. Taking into consideration the fact that there is no deadline by which the company must start trading, some analysts think that it may not happen until September.
Alibaba covers online shopping, business-to-business sales, wholesale trade, online payments and shipping and clouding trade. Last year, it oversaw 11.3 billion orders from 213 million buyers, for a total of $248 billion, which is more than eBay and Amazon transactions combined. We are talking here about “China's largest online shopping destination,” as described by the company's filings.
Tuesday's filing shed more light on the growing financial performance of the company: ending in March 2013, Alibaba's sales were $5.55 billion. However, analysts warn that Alibaba's IPO could negatively impact Yahoo's stock value, which has increased 45 per cent over the past year.
Latest Alibaba investments are the $215 million spent on mobile messaging service TangoMe, $250 million on the ride-sharing app, Lyft, and $206 million put into the online delivery service, ShopRunner. Despite these investments, however, Alibaba noted significant risks to doing business in China because of the country’s extended governmental involvement.