The giant Chinese internet marketplace, which occupies a strong position in the domestic sporting goods market through TMall and other websites, made a triumphant listing on the New York Stock Exchange last Friday. From an initial pricing of $68, Alibaba Group Holding's share shot up to $99.70 and then settled around $87, giving it a market capitalization of more than $200 billion, well above the $150 billion capitalization of Amazon.
Alibaba's high valuation is be partly based on the stock market quotation of Baidu, the Chinese version of Google, which is equal to 12 times its annual sales.
In the last few months, Alibaba had already revised twice the pricing that it was trying to attain on the exchange. Its filing with the U.S. Securities & Exchange Commission had indicated last June that it was seeking a valuation of $119 billion, but it was revised a few weeks later to $140 billion following a surprising jump in its revenues during the second quarter.
The difference was due in fact to a 46 percent jump in revenues to 15.8 billion yuan renmimbi (€1,985.79m-$2,570.56m) in the second quarter, which led its net income to nearly triple to RMB 12.3 billion (€1,545.91m-$2,001.20m).
The big sales jump was attributed to a tenfold increase in sales made through smartphones and tablets as compared to a year ago. One-third of all sales in terms of value came from orders made through mobile devices, up from 12 percent, with a total of 188 million visits.
In the end, Alibaba raised $21.8 billion on the NYSE through its IPO. The company has indicated that it plans to use it to expand in the U.S. and Europe.
The IPO has turned Jack Ma, the former teacher who launched Alibaba 15 years ago, into China's richest man. He and his team have turned the company into the world's largest online retailer in terms of the volume of merchandise going through its marketplaces. It controls 50 percent of the Chinese B2C market.
