Forty Thieves Pleased With Alibaba.com IPO
It seems investors just can’t get enough of Alibaba. Shares in China’s largest e-commerce company skyrocketed 290% yesterday, its first day trading as a public company.
The company’s stock closed at HK$39.50–155 times next year’s estimated earnings. A jaw-dropping multiple even by the giddy standards of the Hong Kong and Chinese stock markets. Value of Alibaba stood at 161 times earnings, based on its projections for 2008. “The growth today reflected our IPO price wasn’t that expensive,” Alibaba chairman Jack Ma told a press conference in Hong Kong. “We are … leaving money on the table to share with others.”
“Others” like Yahoo, for example, which owns a sizable stake in Alibaba Group, the majority owner of Alibaba.com, and could do quite well for itself a a result. Tech Trader Daily’s Eric Savitz breaks it down: “Alibaba Group holds a 75% stake in Alibaba.com, which is worth $17.4 billion. Yahoo owns 39% of Alibaba Group, which puts the value of their share at $6.8 billion. The direct-owned 1.2% stake is worth about $278 million. That puts the total value of Yahoo’s interest in Alibaba.com at north of $7 billion. That’s about 16.7% of Yahoo’s current $42 billion valuation.”
Great news for Yahoo, eh? Now CEO Jerry Yang has something happy to think about while he sits in the Congressional hotseat today answering questions about the company’s role in helping Chinese officials put a journalist accused of leaking state secrets in prison for 10 years …