From Barron's
Alibaba’s Mega IPO: Crowding Out Others?
"investors boxed out of Alibaba’s IPO could snap up Yahoo to capitalize on the Chinese company’s growth. That argument could also help buoy shares in Softbank Corp, which has a 34 percent stake in Alibaba."
By Shuli Ren | August 27, 2014
To pull through the largest IPO in the US history is no small task – China’s largest e-commerce Alibaba Group (BABA) is just trying to do that, reportedly hoping to raise $20 billion. Bankers are scrambling to drum up orders for as much as 4 times the size of the deal, which means they will need quite a few buyers willing to pony up $1 billion or more.
Fund managers, as a result, are looking over their portfolios to make room for Alibaba. Reuters reported that Amazon.com (AMZN), for instance, could be out. Amazon trades at 1.7 times 2014 sales on meager 5% EBITDA margin and 20% top-line growth. Alibaba, by comparison, grew over 50% for the year ended March and had an EBITDA margin of 57.5%. (To be fair, Amazon takes inventory and does direct sales, whereas Alibaba is a marketplace platform provider and relies on advertising, so it has higher margins.)
Reuters also identified possible victims such as Baidu (BIDU) and Tencent (0700.HK), but how about the other e-commerce players? When Alibaba’s largest competitor JD.com (JD) went public on May 22, flash sale discounter Vipshop (VIPS) dipped 3.5%. Cosmetics discounter Jumei (JMEI) slumped 7.5%.
Read more from Barron's >>
Alibaba’s Mega IPO: Crowding Out Others?
"investors boxed out of Alibaba’s IPO could snap up Yahoo to capitalize on the Chinese company’s growth. That argument could also help buoy shares in Softbank Corp, which has a 34 percent stake in Alibaba."
By Shuli Ren | August 27, 2014
To pull through the largest IPO in the US history is no small task – China’s largest e-commerce Alibaba Group (BABA) is just trying to do that, reportedly hoping to raise $20 billion. Bankers are scrambling to drum up orders for as much as 4 times the size of the deal, which means they will need quite a few buyers willing to pony up $1 billion or more.
Fund managers, as a result, are looking over their portfolios to make room for Alibaba. Reuters reported that Amazon.com (AMZN), for instance, could be out. Amazon trades at 1.7 times 2014 sales on meager 5% EBITDA margin and 20% top-line growth. Alibaba, by comparison, grew over 50% for the year ended March and had an EBITDA margin of 57.5%. (To be fair, Amazon takes inventory and does direct sales, whereas Alibaba is a marketplace platform provider and relies on advertising, so it has higher margins.)
Reuters also identified possible victims such as Baidu (BIDU) and Tencent (0700.HK), but how about the other e-commerce players? When Alibaba’s largest competitor JD.com (JD) went public on May 22, flash sale discounter Vipshop (VIPS) dipped 3.5%. Cosmetics discounter Jumei (JMEI) slumped 7.5%.
Read more from Barron's >>
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