Alibaba

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5 Mar, 2015
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Opening US data center

Announcement

Alibaba is moving forward with plans to open a data center in Silicon Valley. The data center will offer several services on an as-needed basis, including cloud computing.

For the time being, we are just testing the water. We know well what Chinese clients need, and now it’s time for us to learn what US clients need.

8 Dec, 2014
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Chinese education system lacks creativity

Ma says Chinese jiaoyu education system produces students that test better than anyone in the world in jiao – learning – but is lacking in yu – fostering or nourishing creativity:

I think China’s jiao is fine. The problem is with the yu. In terms of jiao, China’s students test better than anyone in the world, but yu is about fostering culture and emotional IQ.
28 Oct, 2014
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Just outside world top 10

Alibaba’s market cap of $247 billion at its intraday high places it only $2 billion outside the world’s top 10 most valuable companies. It would have overtaken Novartis in tenth spot except for better-than-expected third quarter results that also boosted Novartis’s shares intraday. Revenue was $8.6 billion for the financial year compared with Walmart’s $473 billion.

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Wants to invest in Hollywood

Ma says on a conference call that he plans to invest in Hollywood:

I want to come here looking for partners

Alibaba Film is in talks focused on buying a 34% stake in Lionsgate, but they are looking now for who they should be buying it from. Source:

And it’s not just Lionsgate they are talking to, so they are juggling a lot

The source says companies like Alibaba use a ‘Chinese abacus’ approach in deals:

People should be wary about assuming that these Chinese investors are just coming with the money… The Chinese abacus is always there, it’s not always evident, but it’s always there

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Matches Walmart market cap

Alibaba’s market cap reaches a high of $248.15 billion compared with Walmart’s high of $247.5 billion intraday. At market close the two retailers are around equal at $246 billion. Alibaba’s shares closed up 1.9% at $99.68, 47% higher since the IPO.

22 Sep, 2014
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Bigger than Wal-Mart

Research firm S&P Capital IQ calculates that at its intraday high of $99.70 a share, Alibaba has a $245.7 billion market capitalization and is in the top 10 biggest U.S. companies. If Alibaba were in the S&P 500 it would rank as ninth biggest, ahead of Wal-Mart, Chevron and P&G.

19 Sep, 2014
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May be world’s biggest

Alibaba says that its IPO may become the world’s biggest:

Shares in Alibaba’s IPO were priced at $68. The offering of 320.1 million shares, trading under the ticker symbol BABA, raised $21.77 billion, eclipsing the previous U.S. record set in 2008 when Visa raised nearly $17.9 billion. Underwriters have a 30-day option to buy up to about 48 million more shares. That means the offering size could be as much as $25 billion, which would make Alibaba’s the largest offering ever anywhere in the world.

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Tech stocks mixed

Shares in five companies related to Alibaba end mixed on its debut trading day. Alibaba part-owner Yahoo closes down 3% after gaining 20% over the previous few months while SoftBank Corp., another major Alibaba shareholder, loses 1%. U.S. e-commerce rival Amazon ends 2% higher after an analyst raises his price target on the stock, EBay falls 0.5% and JD.com closes down 4%.

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11th biggest

Alibaba’s closing price of $93.89 is a 38% gain from its $68 IPO price and values the company at $231 billion. If it were included in the S&P 500, it would be the eleventh-biggest company in the index.

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Closes at $93.89

Alibaba ($BABA) closes at $93.89 a share on its first day of trading on the New York Stock Exchange. The closing level is 38% higher than its IPO price of $68 but only 1.3% higher than its trading debut of $92.70.

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Share volume spikes

Yahoo’s trading volume spikes to more than 218 million shares by midway through the afternoon session as investors offload the Alibaba part-owner after a 15% run-up since the start of August. FactSet data show the volume is about eight times its average daily total. The shares are down 2.3% at $41.12.

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Beats Twitter, Facebook pre-orders

Online brokerage firm TD Ameritrade says pre-open orders for Alibaba ($BABA) were around three times the volume it received for Twitter on its market debut day, and higher than the volume it received for Facebook.

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Beats Twitter trading volume

FactSet data shows Alibaba has beaten Twitter’s first-day trading volume within an hour of its debut. A total of 110 million Twitter shares were traded on its first day on the market, while Alibaba has already reached volume of 170 million.

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‘Selling other tech stocks’

UBS trader Jeffrey Yu says investors are selling some other large-cap tech stocks to make room for ‘crazy busy’ trading in Alibaba. He says this is why Amazon is off 0.8% for the week despite gaining 1.1% intraday and why Alibaba part-owner Yahoo is down 5% after a run-up earlier in the week. The broader Nasdaq Composite is down 0.6%.

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Yahoo gains $5.1 billion

Yahoo gains $5.1 billion by selling 121.7 million of its Alibaba shares into the IPO and keeps 401.8 million additional shares that are valued around $37 billion based on Alibaba’s $92.70 opening price. This fails to impress investors, and its stock is down by 3.8% around midday.

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China’s richest

Ma becomes the richest person in China as the Alibaba IPO pushes his net worth over $16 billion. His total net worth grows higher when $800 million in cash that he pocketed by selling shares is added. His personal fortune is now larger than that of Baidu founder Robin Li, who has $16.6 billion, and Pony Ma of Tencent with $15.5 billion.

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Yahoo stock crashes

Yahoo shares fall sharply in the hours after Alibaba’s debut. At one point during the day the stock price of the U.S. internet company, which has a stake in Alibaba worth around $38 billion, indicates that its core business is worth less than zero – at around minus $0.50 a share.

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Rated above Facebook

Rapid Ratings, an independent firm that rates companies on a scale of 1-100 for financial health, places Alibaba at 71, a level that in the past has presented very little default risk. This places it higher on the company’s rankings than Facebook, rated at 70, Amazon at 41, Yahoo at 45 and Twitter at 16.

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Bigger than Facebook

Alibaba’s ($BABA) market capitalization rises to around $228 billion in the 20 minutes following its debut. Facebook’s market cap is around $200 billion and JP Morgan Chase’s around $230 million.

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Leaves $8 billion on the table

The differential between the $68 IPO price and $92.70 trading debut translates into just under $8 billion in value that Alibaba and shareholders selling into the IPO left on the table.

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$7.9 billion gain

The selling price of $92.70 in the first trade of Alibaba shares translates to an overall $7.9 billion gain from the $68 IPO price given the 320.1 million-share float. Figures from data provider Dealogic show the sum total created by all other stock debuts in 2014 including first-day losers is $5.3 billion.

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Alibaba investment

A U.S.-China Economic and Security Review Commission report says Usmanov is a multiple investor in Alibaba, including buying stock in 2011 when the company was worth about one-fifth of its $168 billion IPO valuation.

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CNBC interview

Interview

Ma tells CNBC that he is ‘honored and excited’ about the IPO:

What we’ve got is not the money, what we’ve got is the trust from the people … I’ve been thinking about the next five or 1o years, how I can make these shareholders happy.

The company will invest in its global operations:

There’s so many things we have to do with our ecosystem not only helping small businesses in China but helping small businesses in every country … I think the money will be spent there.

He says that while Alibaba’s story is Chinese, his hero is American:

The hero I had is Forrest Gump. I’ve been watching that movie for about 10 times … I watched the movie before I came here again [and it was] telling me that no matter what ever changed, you are you.

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Six banks lead deal

Six banks are leading the Alibaba IPO – Credit Suisse, Deutsche Bank, Goldman Sachs, J.P. Morgan, Morgan Stanley and Citigroup. Rothschild is an independent adviser. As a group, the 35 banks working on the deal will split a base pool of 1% of the proceeds, as much as $250 million, plus potentially 0.2 percentage points more in incentive fees, as much as $50 million. The top five banks on the deal will share a baseline 15%, or at least $163.5 million. Citigroup will receive 7.5% of the fee pool or at least $16.35 million.

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‘Highly concentrated IPO’

Sources tell Bloomberg News that half of the IPO allocation went to the top 25 accounts, making it a highly concentrated deal focusing on long-only investors:

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Year-to-date comparison

Research firm Standard & Poor’s Capital IQ says that the $68-a-share IPO price translates to a valuation of $168 billion, while the combined value of the 154 firms that have listed so far in 2014 is $180.5 billion.

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NYSE decorations

The New York Stock Exchange decorates its entrance with an American flag, a Chinese flag and an orange flag with the Alibaba logo for the company’s trading debut.

It's here. $baba

A photo posted by Michael de la Merced (@nymdelamerced) on

18 Sep, 2014
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IPO price $68 a share

Alibaba’s IPO price is set at $68 a share, at the top of its indicative range of $66-$68, an increase from the previous price idea of $60-$66. The price indicates an IPO value of $21.8 billion. The pricing of $68 a share values the entire company at $168, making it bigger than Amazon, with a market value of $150 billion.

5 Sep, 2014
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Files prospectus

Alibaba files its Form F-1 IPO prospectus with the Securities and Exchange Commission.

6 May, 2014
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Ownership of Chinese assets

Alibaba’s securities filing reveals that due to foreign ownership caps in China, buyers of Alibaba shares won’t actually own part of the company’s mainland assets, but will purchase part of a Cayman Islands-incorporated structure called Alibaba Group Holding Ltd. that is entitled to a share of the profits of Alibaba’s Chinese operations. Ma and Xie will retain control of the company’s Chinese assets. At least one locality in China has declared the structure – known as a variable interest entity – to be illegal. Alibaba:

[…] there are substantial uncertainties regarding the interpretation and application of current and future PRC laws, rules and regulations.

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