Alibaba: After the float

THE initial public offering of shares in Alibaba, due shortly on the New York Stock Exchange, may raise more than $20 billion, making it one of the biggest IPOs on record, and value the Chinese e-commerce firm at $150 billion or more. But is it worth it?There are certainly reasons to believe so. The firm dominates online shopping in China, which has passed America to become the world’s biggest e-commerce market. In terms of gross sales, Alibaba is bigger than eBay and Amazon combined. And unlike Amazon, Alibaba makes significant profits. Bolstering the case for optimism is the firm’s recent performance. Revenues shot up 46% in the second quarter, year-on-year, to top $2.5 billion; and profits almost trebled to $2 billion.There were worries, as there had been about Facebook, that Alibaba might stumble in the transition from desktop computers to mobile devices. This would be disastrous, since m-commerce is taking off spectacularly in China (see chart). However, just as Facebook’s switch to smartphones and tablets has gone better than feared, Alibaba has quickly mastered the mobile internet too. According to iResearch, a consulting firm, over four-fifths…

Link to article: www.economist.com/news/business/21615597-chinese-e-commerce-firm-faces-growing-competition-after-float?fsrc=rss|bus

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