It's the largest e-commerce company in China, which is the second largest e-commerce market in the world, but for many investors the question remains: "What is Alibaba?"
One answer: It's the largest initial public offering (IPO) hitting the markets as soon as this year. When rumblings of the Alibaba IPO started, it was thought that the company would be valued at $100 billion. Now, that figure has climbed as high as $150 billion.
Alibaba may not be a household name in the United States yet, but that's sure to change by the time the company goes public. Alibaba's size, potential, and reach are just too undeniable.
Alibaba: The Most Profitable E-Commerce Player in China
All those websites together account for more than 50% of the online sales that take place in China.
According to market researchers McKinsey & Co., China's e-commerce market was a $210 billion industry in 2012. By 2020, analysts project the Chinese e-commerce market could be a $420 billion business.
And Alibaba is positioned to be the leader in this soaring industry.
Alibaba set a company record on Nov. 11 when more than $5.7 billion exchanged virtual hands in 24 hours over its two main platforms, Taobao and Tmall. The sales came on "Singles' Day" in China, when single men and women celebrate their single lives by showering themselves and each other with gifts.
Compare that $5.7 billion to the $1.7 billion that was spent in the United States on the biggest online shopping day of the year, "Cyber Monday," and you get an idea of just how big Alibaba is.
Just like its American counterparts Amazon, PayPal, and eBay, anytime a purchase is made on one of Alibaba's sites, the company gets a cut. From July 2013 through September 2013 alone, Alibaba's sales reached $1.78 billion, with net income of $801 million. The company already generates nearly $5 billion in revenue a year.
And all that revenue has investors eagerly awaiting Alibaba's IPO.