Alibaba Is Poised For Global Growth:
Alibaba had its initial public offering Friday and by many accounts was successful – (unless you were a retail investor and didn’t get preferred IPO shares). The company is already one of the largest capitalized stocks in the world and investors are already wondering whether this company is all hype or a signal that the market has become overextended. Neither seem to be true.
The U.S. Stock market is around an 18 P/E ratio which is not indicative of a bubble and Alibaba is first example of a Chinese company that has Western interests and is likely to grow exponentially. If anything, Alibaba is a showpiece and example that China is open for business. Regardless of the political concerns about the Chinese government, this IPO is the first of many to come that show China is now seeking to replicate the successes of many U.S. companies and will allow shareholders to dictate the future of a business concern- not the government. The second mover advantage of following the footsteps of large U.S. internet companies will help these Chinese companies avoid the mistakes made by firms in the past.
It’s important to recognize that Alibaba has its roots in mainland China and is not a company brought to market from Shanghai or Hong Kong. This gives investors direct access China as opposed to buying an ETF or mutual fund and after only a half day of trading, Alibaba is well known by many Westerners. It’s a unique opportunity to get access to the mainland demographic shift without worrying if the government will interfere with Alibaba’s business model and stop Jack Ma from executing his plan.
Alibaba does more business than EBay and Amazon combined and is already valued at a higher market capitalization than Walmart. The company is a premier consumer to consumer and business to business/consumer web portal that lists over 20 million products. The capital raised from the IPO will allow Ma and company to acquire more synergistic assets and create economies of scale unrivaled internationally due to its growing base if middle class consumers and wealthy class that is growing in China in ways the world has yet to see.
Expect Alibaba to quickly become one of the largest companies in the world. It’s already the 20th most visited internet site globally and new users on the internet are growing at a faster rate in the developing world.