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Alibaba shares up 38% on debut; valued at $232B, more than Amazon & eBay combined

22 September, 2014

Jack Ma-led Alibaba Group Holding saw its share price shoot up on US listing and almost touched a high of $100 a share in intra-day trades on NYSE on Friday. It ended the first day at $93.89, up 38 per cent on its issue price, with a market cap of $232 billion.

Amazon share price also rose 1.94 per cent on NASDAQ and ended the day with a market cap of $150.16 billion. eBay Inc ended 0.57 per cent lower and had a market value of $65.37 billion.

Alibaba is now valued more than Amazon and eBay combined and is just a tad below $245.6 billion market cap of Wal-Mart, the world’s largest retailer.

Earlier, the Chinese e-commerce giant had upped the price band for its initial public offer (IPO) through issue of American Depository Receipts (ADR), pricing the issue in the band of $66-68 a share, up from $60-66 each. It had finally priced the issue at the upper end of this band.

It raised $21.8 billion from the issue and if the underwriters go on to exercise the greenshoe option, as expected, the overall issue is pegged at $25.03 billion.

Over half of the issue proceeds went to its selling shareholders including founder and chief Jack Ma besides strategic investor Yahoo. These existing shareholders got $13.4 billion from the issue.

The company got net proceeds of approximately $8.2 billion after deducting estimated underwriting discounts and commissions and the estimated offering expenses.

It has not detailed the expenditure plan but said it currently intends to use the net proceeds from this offering outside of China, and do not expect to transfer such funds into China.

Alibaba is the largest online and mobile commerce company in the world in terms of gross merchandise volume (GMV). It operates its ecosystem as a platform for third parties and do not engage in direct sales, compete with its merchants or hold inventory.

It runs Taobao Marketplace, China’s largest online shopping destination; Tmall, China’s largest third-party platform for brands and retailers and Juhuasuan, China’s most popular group buying marketplace by its monthly active users.

It also operates Alibaba.com, China’s largest global online wholesale marketplace, 1688.com, its China wholesale marketplace, and AliExpress, its global consumer marketplace.

Through its related company, Alipay, it offers payment and escrow services for buyers and sellers and has a platform approach to shipping and delivery by working with third-party logistics service providers through a central logistics information system operated by Zhejiang Cainiao Supply Chain Management Co., Ltd., or China Smart Logistics, its 48 per cent-owned affiliate. It also has investment in UCWeb, a developer and operator of mobile web browsers.

Here are some factoids

GMV

Its three marketplaces generated a combined GMV of $296 billion from 279 million active buyers in the 12 months ended June 30, 2014. In the three months ended June 30, 2014, mobile GMV accounted for 32.8 per cent of GMV.

Users

The company has 279 million active annual buyers, 188 million mobile monthly active users, 8.5 million active sellers, 52 orders annually per active buyer and buyers across over 190 countries.

Revenues

Its revenue is primarily generated from merchants through online marketing services (via Alimama, its proprietary online marketing platform), commissions on transactions and fees for online services. Alibaba also generates revenues through fees from memberships, value-added services and cloud computing services.

Its total revenue increased by 52.1 per cent to $8.46 billion in fiscal year ended March 31, 2014. The total revenue increased by 46.3 per cent in the three months ended June 30, 2014 to $2.54 billion over the year-ago period. The net income increased by 170.6 per cent to $3.77 billion in fiscal year 2014 while it grew 179.6 per cent to $2 billion in Q1 FY15. For the three months ended June 30, 2014, its net income included a net gain of $1 billion from step-up acquisitions arising from revaluations of previously held equity interest.

The company drew bulk of its revenue from China commerce ($2.15 billion) followed by international commerce ($237 million), cloud computing ($38 million) and others ($115 million) in the first quarter ended June 30, 2014.

Alipay processed payment volume of $778 billion for the 12 months ended June 30, 2014.

Buyers

Buyers on Alibaba.com are located in numerous countries all over the world, with the US, India and the UK being among the leading countries. This could mean that Indian SMEs are possibly the second most active buyers on Alibaba outside China. These buyers typically are engaged in import and export.

Key shareholders

Yahoo encashed $8.28 billion from the issue and its holding has shrunk to 16.3 per cent. Jack Ma got $867 million from selling some of his shares and post IPO holds 7.8 per cent stake.

SoftBank, which did not sell any shares, remains the single-largest shareholder with 32.4 per cent holding post issue.


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Alibaba shares up 38% on debut; valued at $232B, more than Amazon & eBay combined

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