We're just hours away from the Alibaba Group Holding Ltd. (NYSE: BABA) IPO, a deal that could be the largest initial public offering in history.
Alibaba stock will begin trading on Friday morning (Sept. 19) after months of intense media coverage. Here's all the Alibaba IPO info you need to know before BABA stock hits the market...
Company officials said that depending on how many shares the deal's underwriters buy following the IPO, the IPO total could be much higher. In fact, it could go as high as $25 billion.
"Alibaba is the dominant e-commerce player in a marketplace - China - that's seeing incredible growth in online commerce," Money Morning's Executive Editor Bill Patalon said. "According to the research I've seen, e-commerce in China is projected to hit $540 billion by 2015, and that's just for starters. By 2020, China's e-commerce market will be worth more than the United States, the United Kingdom, Japan, Germany, and France combined. So we know that growth is coming... and we know that Alibaba is the No. 1 gun."
By 2015, the number of Chinese e-commerce users is expected to hit 520 million - that's more than double the number expected in the United States.
But that's just the start. According to the research firm IDC, smartphone shipments in China will top 450 million units this year.
Last month, the company updated its IPO filing and reported that its revenue in the second quarter was $2.54 billion. That was an increase of 46% from the previous year.
In the previous quarter, Alibaba had revenue growth of 39%. The fact that Alibaba's revenue growth is on the upswing just weeks before the IPO should only strengthen investor confidence as Alibaba stock hits the market.
The company did note that its operating profit margin was down to 43.4% from 50.3% last year, but that should not concern investors. Alibaba's costs rose dramatically in the quarter, 68%, as it increased its marketing efforts and made acquisitions ahead of its public debut. The fact that profits are growing at such a high rate is the most important detail here.
"Innovation in many industries has been triggered by outsiders," Ma wrote in a June 2013 article in the Communist party's official newspaper the People's Daily. "The finance industry needs a disrupter, it needs an outsider to come in and carry out a transformation."
And inexperience hasn't stopped Ma from bringing Alibaba into various markets. Ma and Alibaba have purchased logistics, retail, commerce, and media companies in the last year. He also purchased a professional soccer team in early June.
According to Bloomberg's Billionaire Index, Ma's net worth has been calculated at $21.9 billion, making him China's wealthiest citizen - by a wide margin.
The next closest person on the list is Baidu Inc.'s (Nasdaq: BIDU) founder Robin Li, who has a net worth of $16.6 billion. The founder of Tencent Holdings Ltd., Ma Huateng, is third on the list with a net worth of $16.4 billion.
Jack Ma controls a 7.3% economic stake in Alibaba, which is valued at roughly $11.2 billion.
Some of its more notable investments include $1.2 billion on the professional soccer team Guangzhou Evergrande, $800 million on ChinaVision Media, and $215 million in the messaging app Tango.
PowerShares Golden Dragon China Portfolio (NYSE: PGJ) has a position in more than 70 companies, and its holdings are all U.S.-listed companies that generate most of their revenue in China. For that reason, Alibaba is the perfect candidate to join PGJ's holdings once it starts trading on the New York Stock Exchange.
The three largest holdings for PGJ are Baidu, Ctrip.com International Ltd. (Nasdaq ADR: CTRP), and Qihoo 360 Technology Co. Ltd. (NYSE: QIHU).
