# Alibaba IPO in the US



## baby_swallow (7 May 2014)

Finally, Alibaba files for US I.P.O.
Judging by the number of investment banks jostling like kids in a lolly shop to get a piece of the action,
the size of this IPO has a potential to match Facebook's $17B.
But unlike FB, Alibaba is already making money with annual sales now reaching $1B and increasing.
Analysts estimates the whole Alibaba group could be worth $100B to $200B.

For those who are savvy enough to make a quick buck, I think the way to play this is with the Big Boyz.
The game is Pump-n-Dump. This is how IPOs are traded these days, especially if there is a huge amount of hype
involved prior. Just make sure to quickly bail out when the "Dump" starts to happen.





(Disclaimer: The above statements are only market views of the author and does not in any way constitute 
                  financial advice).


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## luutzu (7 May 2014)

baby_swallow said:


> Finally, Alibaba files for US I.P.O.
> Judging by the number of investment banks jostling like kids in a lolly shop to get a piece of the action,
> the size of this IPO has a potential to match Facebook's $17B.
> But unlike FB, Alibaba is already making money with annual sales now reaching $1B and increasing.
> ...





You did say Sales of $1B, not profit of $1B right?

It's insane to pay 100 times of earnings for anything, let alone sales.


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## McLovin (7 May 2014)

luutzu said:


> You did say Sales of $1B, not profit of $1B right?
> 
> It's insane to pay 100 times of earnings for anything, let alone sales.




For the nine months to 31 March they booked $2.8b in profit on sales of $6.5b

For the last full year it was $1.2b in profit on $5.8b in sales.


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## luutzu (8 May 2014)

McLovin said:


> For the nine months to 31 March they booked $2.8b in profit on sales of $6.5b
> 
> For the last full year it was $1.2b in profit on $5.8b in sales.




OK... and they're asking people to pay $100 to $200 billions for  that earnings?

Say you were to own the entire Alibaba and it earns you $1billion. It will need to keep earning that $1 billion (adjusted for your required rate of return) for the next 100 years or 200 years... for you go get your money's worth if you pay $100-200 billions for it.


I don't think most companies that's been around for 50 or 100 years could promise that kind of certainty for the next 10 year, let alone 100... and definitely not a tech company.

But i guess it's speculating so what the hey.


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## prawn_86 (8 May 2014)

Anyone looking to hold longer term I would be extremely cautious. You are essentially buying to into multiple holding companies due to the structure, meaning you have little to no claim on Alibabas actual assets


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## minwa (8 May 2014)

baby_swallow said:


> For those who are savvy enough to make a quick buck, I think the way to play this is with the Big Boyz.
> The game is Pump-n-Dump. This is how IPOs are traded these days, especially if there is a huge amount of hype
> involved prior. Just make sure to quickly bail out when the "Dump" starts to happen.




Didn't seem like it worked so well with FB.


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## McLovin (8 May 2014)

luutzu said:


> OK... and they're asking people to pay $100 to $200 billions for  that earnings?
> 
> Say you were to own the entire Alibaba and it earns you $1billion. It will need to keep earning that $1 billion (adjusted for your required rate of return) for the next 100 years or 200 years... for you go get your money's worth if you pay $100-200 billions for it.




Except it's not earning $1b it's earning an annualised ~$3.7b. Annualised revenue growth is 50%. Annualised earnings growth is over 200%. Given those numbers, $100b MC doesn't seem that extraordinary. Given how fast earnings are rising it's not improbable that they earn north of $4b for the year. I don't know anything about Alibaba except they're a b2b website but given that growth 25x earnings isn't that outrageous. And I'll take a stab and imagine that once they cover their fixed costs a lot of incremental revenue just falls straight to the bottom line.


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## ROE (8 May 2014)

buy Yahoo, they have 40% stake  lot of action on Yahoo share because people want a piece of this and cant get it


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## McLovin (8 May 2014)

ROE said:


> buy Yahoo, they have 40% stake  lot of action on Yahoo share because people want a piece of this and cant get it




22.6% and is planning to sell 40% of that.

There's basically no value to Yahoo's business these days, it's all Yahoo Japan and Alibaba.


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## ROE (8 May 2014)

McLovin said:


> 22.6% and is planning to sell 40% of that.
> 
> There's basically no value to Yahoo's business these days, it's all Yahoo Japan and Alibaba.




ok I got it wrong , just speed reading on stuff I have no interest in but want to get an idea and apparently the richest person out of this is not the founder but some Japanese investor Masayoshi Son..they called him the Warren Buffett of Asia.

http://www.bloomberg.com/news/2014-...lion-on-alibaba-with-buffett-type-return.html

Crazy stuff all up make it an interesting reading


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## luutzu (8 May 2014)

McLovin said:


> Except it's not earning $1b it's earning an annualised ~$3.7b. Annualised revenue growth is 50%. Annualised earnings growth is over 200%. Given those numbers, $100b MC doesn't seem that extraordinary. Given how fast earnings are rising it's not improbable that they earn north of $4b for the year. I don't know anything about Alibaba except they're a b2b website but given that growth 25x earnings isn't that outrageous. And I'll take a stab and imagine that once they cover their fixed costs a lot of incremental revenue just falls straight to the bottom line.




25 earnings might be reasonable. Though i wouldn't put too much weight on the 200% growth figure... it's just not sustainable, even if it's been the norm for this company.

Good luck...


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## McLovin (9 May 2014)

ROE]ok I got it wrong  said:


> 25 earnings might be reasonable. Though i wouldn't put too much weight on the 200% growth figure... it's just not sustainable, even if it's been the norm for this company.
> 
> Good luck...




Well yeah. If it was sustainable and people believed it the company wouldn't be on a much higher multiple than 25x.


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