Friday was IPO time for China’s online shopping giant, Alibaba Group Holding Ltd.

Alibaba  is a China based e-commerce company with over 20,000 employees and sales well over $100 billion per year.

Alibaba.com operates like ebay, Amazon and PayPal all rolled into one.

Alibaba is a dominating force in China, accounting for more than 60% of China’s package deliveries.

In a country with a population over 1 billion people, more than quadruple the US population, that is a lot of deliveries.

The Alibaba IPO made history on the New York Stock Exchange (NYSE) at $92.70 a share, a 45% increase from the initial offering price of $68/share.

At Friday’s peak, Alibaba’s market value reached almost $229 billion, more than all its major competitors including Amazon ($150 billion) and Ebay ($65 billion).

Unbelievably, when Alibaba started in 1999, it only sold a few dozen items.

This incredible growth will surely motivate entrepreneurs and startups out there with dreams of multi-billion dollar IPOs.

It’s already prompted Alibaba employees to create at least 130 of their own startups, aiming to be their own superstars.

The IPO also resulted in many Alibaba employees becoming millionaires overnight.

Concerned about the impact of sudden wealth on its employees, Alibaba founder, Jack Ma, emailed employees warning them not to become greedy.

This is likely prompted by Ma’s own humble beginnings as a website developer.

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Alibaba itself is keeping approximately $8.2 billion of its IPO proceeds while Ma is cashing out for approximately $900 million.

Not Everyone is Buying into the Alibaba IPO Hype

Not everyone is hyped about the Alibaba IPO.

The New York Times offered some reasons to to think twice about the Alibaba IPO frenzy, citing that Alibaba revenues don’t necessarily justify the current valuation.

Forbes also doubted whether Warren buffet would bother investing in Alibaba. Lack of global appeal, easy duplication and changing technology were among the reasons for doubting Alibaba.

Yahoo Criticized

Although Yahoo made over $8 billion in connection with the IPO, it’s being criticized for failing to maximize the value of the large amount of stock it held. It sold 121.7 million shares at the initial price of $68/share rather than Friday’s opening price of around $93/share. The difference translates into a few billion dollars.

Other Yahoo critics pondered what an “irresponsible” Marissa Mayer could do with the $8 billion.

This was likely the cause for Friday’s Yahoo stock price drop.

Ultimately, the Alibaba IPO might result in Alibaba buying Yahoo.

Time Will Tell

Only time will tell if Alibaba remains a success. Perhaps an eventual foray into the US online retail space, among competitors like Amazon, will bring stock prices even higher.

 

Topics: Alibaba, IPO