Alibaba IPO - winners, winners and maybe a loser.

Stuart Lauchlan Profile picture for user slauchlan September 21, 2014
Have we all just gotten a bit carried away after watching the world’s biggest ever IPO after raising $25 billion on Friday?

Jack Ma is a man who thinks big. As the founder of Alibaba said on Friday:

We want to be bigger than Walmart.

So is that likely? Well, Alibaba’s gross merchandise value is already bigger than that of eBay and Amazon combined at a time when Walmart’s growth has been slowing down, so…

Or are we just a bit carried away after watching the world’s biggest ever IPO after raising $25 billion on Friday?

The IPO initially raised $21.8 billion, but then underwriters exercised an option to sell an additional 48 million shares - 26.1 million from Alibaba and 18.3 million from Yahoo! which netted them an extra $1.8 billion and $1.2 billion respectively.

Around 271 million shares were traded. To put that in context, that’s more than double the number we saw during the stock market debuts of Twitter or Facebook. In fact the stock was so popular that the price was revised up from their initial value of $68 to open at $92.70, peaking at $99.70.

There are some clear winners and some losers from all this. Curiously enough, Yahoo! falls into both camps.

On the plus side, Yahoo! sold 27% of its stock in Alibaba and raked in $7 billion in cash which will come in handy. On the down side, its share price took a tumble almost as soon as the Chinese firm’s IPO began. Poor Yahoo! - even when it gets a $7 billion boost to the coffers, the market doesn't like it much.

On the other hand, some retailers have already reaped the benefit of working through Alibaba, such as UK high street staple Marks & Spencer which sells its clothing in range in China via Alibaba subsidiary, Tmall.

Ricky Wilson, the head of Marks & Spencer’s overseas internet business, said:

Tmall accounts for 50 per cent of all clothing and footwear purchases made in China, providing international brands with a huge opportunity to reach China’s growing middle classes.

Others see the IPO as indicative of a shift in the nature of ecommerce. Zach Nelson, CEO of NetSuite which has been heavily pushing its SuiteCommerce platform, commented:

The Alibaba IPO is representative of the fact that the B2C commerce is now the de facto standard for consumers looking to purchase items. The next revolution will be bringing the B2C buying experience to B2B transactions.

Others just see the IPO as a sign that there’s life in the US stock market yet Vineet Jain, CEO Of Egnyte, commented:

With a lot of negativity around the space and constant "bubble" talks that have been swirling over the last 6-8 months, [the IPO] will be a major inflection point for the tech industry moving forward. A successful IPO from Alibaba can single-handedly create an uplift for other tech companies with impending IPOs, keeping the euphoria around pricing and valuations high.

I believe you will see a lot of movement from surrounding tech companies, specifically cloud companies. Whether it be M&A or more IPO announcements, Alibaba will certainly create a worldwide ripple effect for tech companies and the financial markets.

And one certain winner: Jack Ma himself, who’s now worth a cool $14 billion. Not bad for a guy who was once turned down for a job in a KFC store.

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