Alibaba's pre-IPO S-1 filing reveals a dominant etailer with sexier numbers than Amazon
Alibaba has taken the next step towards its long-awaited initial public offering with a preliminary S-1 filing with the Securities and Exchange Commission.
The filing, which has the look and feel of an infographic-filled blog post, states that Alibaba hopes to raise at least $1 billion in the offering, although that's almost certainly a placeholder figure. As is customary, the company has yet to fill in the blanks for the target price of such an offering. It's also worth noting that Alibaba is rumored to be continuing a trend of marquee listings choosing the NYSE – or as Pando has taken to calling the exchange, the NY(F)SE – in the wake of the Facebook IPO clusterfuck perpetrated by its rival NASDAQ, although todays filing does nothing to confirm that fact.
Alibaba claims to have more than 231 million buyers ordering over 11.3 billion items through its online marketplace each year. It also states that 136 million people use its mobile applications or websites each month, and that its services represent some 76.2 percent of all mobile-driven purchases in China. (It also claims 8 million sellers and 950,000 deliverymen.)
Alibaba's financials compare favorably to Amazon's, its closest American counterpart. Where Amazon claimed $745 million in income, Alibaba claimed $1.73 billion, despite making just a fraction -- $4.69 billion to $74.45 billion -- of the revenues Amazon claims. (It has just over half the cash on hand, with $5.2 billion to Amazon's $9.7 billion, however.) Amazon is bigger, but Alibaba is turning a larger profit despite its much smaller revenues.
The news of Alibaba's impending IPO has also been weighing heavy on a few other public companies, and not just for competitive reasons. Yahoo's roughly 24 percent stake in the company has been credited with buoying its beleaguered Web portal business amid an attempted Marissa Mayer-led turnaround. Yahoo's stock was largely flat in trading today, down just 1.14 percent prior to Alibaba's filing being published. The stock is up 1.25 percent in after hours trading. More illustrative, however, is the 11.6 percent bump Yahoo has seen over the last 30 days as Alibaba's IPO timeline has become clear.
Amazon's stock, on the other hand, was down 4.09 percent in today's trading and 6.5 percent over the last 30 days, although it's unclear whether this is Alibaba-related or more the result of a broader trend of Wall Street selling growth technology stocks. These and other stocks could continue to move as Wall Street has a bit more time to dissect the finer details of today's filing.
The other question to begin asking as Alibaba approaches its public debut is what impact will the company's status have on its going forward operations. Going public should afford the Chinese giant access to new sources of capital and increase its ability to grow, both organically and, potentially, via acquisition – something we have seen its domestic counterpart Tencent begin to do with growing frequency. On the other hand, it remains to be seen what impact increased regulatory scrutiny and short-term shareholder mindsets will have on a company that, to date, has had the freedom of operating without much outside interference.
Pando weighs in
Pando has covered Alibaba's growth at length in recent years. On Alibaba's investment in the Tango messaging company, we wrote previously:
While these services have users from around the world, most of these companies have centralized fiefdoms in certain regions. Some, like WhatsApp and Tango, are popular in the United States and Europe. Others, like Viber and Line, are popular in Southeast Asia. This can frustrate consumers with contacts around the world, as they are forced to use a variety of services to perform essentially the same function — if any service manages to remove that hassle, it stands to attract many of the people who care more about their contacts than the services they use.
This investment could allow Alibaba and Tango to create a service (or at least a couple of services) that will do just that. On its investment in the Intime Retail brick-and-mortar company:
American Web companies have long been rumored to open their own storefronts. Google has been rumored to be creating a store for its tablets, laptops, and other physical products since the beginning of last year. Amazon was expected to open its own physical stores in Seattle in 2012. Neither company has opened or hinted at opening such stores, but the rumors persist. Now it seems that Alibaba will beat them to the punch, just like it did with same-day delivery.
Alibaba’s deal with Intime doesn’t even come close in scale to the acquisitions companies like Facebook or Google have made in the last few months. But as an investment from an e-commerce company looking to quash its competition, creating a viable “online-to-offline” experience might help Alibaba stay in front of its competition and continue to best its American counterparts. On its effect on the Weibo IPO:
Weibo isn’t the only company affected by Alibaba’s kiss of death. The company’s performance has been boosting Yahoo’s stock price for the last year, leading some to conclude that Yahoo’s own shares are effectively worthless, and making industry observers fearful of its prospects.
The difference, of course, is that investors are purchasing Yahoo shares to get a piece of Alibaba. In this case, investors are planning to purchase Alibaba’s shares to get a piece of Weibo. The details are different, but the result is the same: more attention for Alibaba and its future and less attention for the companies to which it is connected. As I said: a kiss of death. On its investment in "China's YouTube":
Alibaba is preparing for war, and it’s using those preparations to bolster its IPO prospects. The company is expected to go public some time this year, and every deal it announces makes its stock even more appealing to investors. That the company is able to kill two birds with one stone (or at least serve two functions with one acquisition) makes it easier to understand why it’s spent several billion dollars in the just a few months. It’s playing the long and short games.