Alibaba Is Set To Become The King Of IPOs
By Christine Kern, contributing writer
Founder Jack Ma is the ‘Crocodile in the Yangtze”
Alibaba is expected to be the largest IPO in history, raising between $21 billion and $25 billion and with a market cap of approximately 200 billion.
With 279 million buyers (as of June 30), Alibaba accounts for 80 percent of all online sales in China. Of that number, 188 million are active on a monthly basis. Buyers use Alipay to make purchases on Alibaba, which has 800 million digital accounts and approximately 200 million mobile accounts.
Alibaba buyers place 11.3 billion orders each year and account for 70 percent of Chinese package delivery volume, and Alibaba’s sale from mobile accounts for ~ 33 percent of its overall revenue, up from ~5 percent two years ago
Alibaba’s marketplaces drove $248 billion in transaction volume last year, more than Amazon.com and eBay combined. Alibaba’s November 11th “Singles Day” promotion drove $5.6 billion in sales in a 24-hour period, eclipsing Black Friday sales.
With a profit margin of 45 percent and a growth rate of approximately 50 percent a year, Alibaba booked $2.3 billion in profits the first six months of 2014. Analysts project Alibaba’s profits to grow to approximately 7 billion in 2015.
Alibaba, whose sprawling web of companies has enveloped the market, dominates in China’s economy, accounting for more than three-quarters of all internet sales. It has a finger in every pie: acting as a marketplace for small businesses, a shop front for imported goods, and a convenient online wallet to settle these transactions.
More recently it added banking services, cloud computing and instant messaging and stakes in a film company and a football club.
And the man that made all of this possible is Alibaba’s 50-year old Founder, Jack Ma, who holds 7.4 percent of Alibaba and has a net worth of $22 billion. His salary as a teacher in 1999 was $15 a month.
In an open letter to investors, Ma addressed the company's core business model and vision, writing that the company's vision "makes it impossible for us to become an empire-like business."
He also explained that the company plans to "fight for the little guy," and that the company, "will be judged by how much progress we bring to the world."
"In the past decade, we measured ourselves by how much we changed China. In the future, we will be judged by how much progress we bring to the world," Ma wrote as he launched the company's pitch to investors.
According to Ma, Alibaba is a value-based company, driven by a mission to “make it easy to do business anywhere.” He states that the company wants to help small businesses grow by solving problems through internet technology, not just pushing the boundaries of that technology but instead seeking “to harness technological improvement to expand the boundaries of business.”
Alibaba does already operate internationally, but so far the company has only a minimal presence within foreign markets.
The prospects within China are tantalizing. Only around half of China's 1.3 billion population is online.
The eMarketer predicts China's retail market will overtake the size of the US market by 2017. And the number of those shopping via computers and smartphones is increasingly rapidly.
And Jack Ma is contemplating the potential of big data analytics.
"EBay may be a shark in the ocean but I am a crocodile in the Yangtze," Ma said. "If we fight in the ocean, we lose, but if we fight in the river, we win."