Seeking Alpha

Alibaba releases IPO filing, shows off big numbers

  • Alibaba (ABABA) has released its long-anticipated F-1. No trading symbol has been proposed yet, and the company nominally says it's looking to raise up to $1B (it'll almost certainly raise more). The IPO underwriters: Credit Suisse, Deutsche, Goldman, JPMorgan, Morgan Stanley, and Citi.
  • Alibaba had 2013 revenue of $5.55B (+73% Y/Y), net income of $1.35B, and adjusted net income of $2.16B. Gross margin was 71.9%. R&D spend totaled $604M, sales/marketing spend $581M, and G&A spend $465M.
  • The company claims an annual gross merchandise volume (GMV) of $248B on the back of 11.3B orders, 231M active buyers, and 8M active sellers.Q4 GMV rose 53% Y/Y to RMB529B, with mobile accounting for 19.7% of the total. Mobile MAUs amount to 136M.
  • Chinese commerce accounted for $4.69B of the company's 2013 revenue. International commerce accounted for $669M, cloud services $105M, and everything else $87M.
  • Founder Jack Ma owns 8.9% of shares going into the IPO. SoftBank (SFTBF) owns 34.4%, and Yahoo (YHOO) 22.6%.
  • Yahoo investors are taking the F-1 release in stride. Shares -0.3% AH.
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Comments (13)
  • may be
    , contributor
    Comments (174) | Send Message
     
    SO when do we expect it to go on the market?? Do they say that any where ??
    6 May 2014, 05:41 PM Reply Like
  • King Rat
    , contributor
    Comments (766) | Send Message
     
    I would almost want to be contrarian here and suggest Alibaba would be more valuable private. If their numbers are real, they don't need an IPO to grow. The IPO would be worth about 9 months of last year's net, perhaps 4 months of next year's net. Yet in the process they lose independence and risk people like Carl Icahn bossing them around.
    If their numbers are not real, they set themselves up to be in the front line of a Chinese/US cold war.

     

    4 months of net income for a lifetime of blessings. Makes Esau look good. At least he got a free lunch.
    6 May 2014, 05:50 PM Reply Like
  • samuel_liu
    , contributor
    Comments (2798) | Send Message
     
    Alibaba is huge in China! There is no question of that?

     

    The reason Jack Ma chose NY vs HK-- preferable, was because New York gave him majority control of his company with minority ownership, not true in Hong Kong.

     

    Lastly, Jack Ma turned over day to day operations of the internet behemoth over to a younger person, as he claimed that he was too old.
    6 May 2014, 07:36 PM Reply Like
  • investingInvestor
    , contributor
    Comments (1642) | Send Message
     
    sam, you are saying that Jack Ma is cashing out, taking the big payoff, moving on. I agree.

     

    Jack Ma has made Alibaba, but he wants to move on. He has said so. This leaves a lot a rubes holding Alibaba IPO stock. What are Alibaba's assets other than Jack Ma? Few, very few, overseas, my friend.

     

    Wall Street is pulling a fast one. After 2008-2009, it is amazing how many people want to lose their money so they can once again blame Wall Street. The IPO PR machine pegs Alibaba at 70+ percent YoY increase in sales, but at $240+ billion per year, how could any company on Earth grow at over 70%. Is that crazy talk? That seems impossible when Alibaba "claims" to be bigger than its next 2 or 3 competitors combined. Reality check?

     

    Alibaba claims over 8 million sellers. All of the US has about 8,200 "public" corporations actively in business. Alibaba has 1,000 times the total US businesses selling through Alibaba? Naw...the Alibaba numbers seem impossible. The US is over 25 percent of global commerce...but Alibaba claims to have 1,000 times as many sellers. Wall Street PR?

     

    What I surmise is that the vast majority of over eager stock buyers have NO IDEA what Alibaba does or owns. Wall Street is chumming the waters. Soon, a fish fry!
    7 May 2014, 08:40 AM Reply Like
  • RipCrackle
    , contributor
    Comments (120) | Send Message
     
    A lot, if not all, of the arguments that you mentioned can be applied to Amazon.
    7 May 2014, 09:00 AM Reply Like
  • samuel_liu
    , contributor
    Comments (2798) | Send Message
     
    II, I doubt Jack Ma is cashing out, he is the kingpin in Cn and East Asia as only Li Kashing can compare to.

     

    Lots of entrepreneurs and students and homemakers sell on Taobao (former-Ebay).

     

    Cn has taxation dificuties. I think I will sit this one out ...
    7 May 2014, 09:38 AM Reply Like
  • investingInvestor
    , contributor
    Comments (1642) | Send Message
     
    Rip, I might be wrong but I have discovered that Alibaba has 0 means of production, 0 means for distribution, 0 merchandise for sale. Alibaba's story is not possible, it appears made up fiction, and Wall Street appears to be over hyping the Alibaba IPO.

     

    What is Alibaba, really? Alibaba is similar to eBay but definitely not "B&M" Walmart spread around rural America or "ecommerce" Amazon with global warehouses called fulfillment centers.

     

    How is Alibaba making money, really? Alibaba does no direct sales. Alibaba offers free Web services to 3rd parties and optional "for a fee" Web placement and advertising.

     

    I believe Alibaba is closer to a $5 billion per year business. I believe that much of the merchandise is gray or black market, including factory rejects and counterfeits. I might be wrong but I have studied merchandise I understand like Nike shoes and electronics. Alibaba offers Apple iPads at $120 (heh-heh). Alibaba offers Rolex watches far below $35 (wow, one seller offers $0.10 per Rolex).

     

    I see Alibaba as around a $5 billion per year business fronting/arbitraging for questionable merchants and offshore money flows. What do SA readers see?
    8 May 2014, 09:49 AM Reply Like
  • gooddoc
    , contributor
    Comment (1) | Send Message
     
    Is there anyway to buy shares from the IPO from the banks mentioned in the article ?
    6 May 2014, 07:06 PM Reply Like
  • slevin00calabera
    , contributor
    Comments (4) | Send Message
     
    Not unless you are a big time investor at one of the banks. I'll probably get a few shares but that is because I have been investing with this bank for years and they handle a lot of my money.
    7 May 2014, 01:49 AM Reply Like
  • NYer1
    , contributor
    Comments (1257) | Send Message
     
    AMZN watch out, the big dog is coming to eat your luncH!
    6 May 2014, 07:55 PM Reply Like
  • Andy8
    , contributor
    Comments (6) | Send Message
     
    Alibaba is Chinese Amazon plus other local Asian consumer services. Doubting Alibaba is doubting 1 billion plus consumers in China & Asia. I am taking my chance betting on Alibaba with SoftBank, Yahoo, smart money and billion Alibaba customers.
    6 May 2014, 08:44 PM Reply Like
  • Andy8
    , contributor
    Comments (6) | Send Message
     
    Alibaba is Chinese Amazon plus other local Asian consumer services. Doubting Alibaba is doubting 1 billion plus consumers in China & Asia. I am taking my chance betting on Alibaba with SoftBank, Yahoo, smart money and billion Alibaba customers.
    6 May 2014, 08:44 PM Reply Like
  • James Sands
    , contributor
    Comments (2135) | Send Message
     
    A couple points from the filing....

     

    For 2013, 12% of Alibaba's total revenues are "international" with 91% being wholesale versus retail, a contrast to Alibaba's Chinese segment which represents 85% of total revenues of which 93% are retail versus wholesale.

     

    I would wager that of the international 12% revenue segment somewhere around 90% are based within Asia still. Many will claim that this spells doom for Amazon and eBay, but I'm not so sure this can be assumed. Alibaba has relentlessly been spending cash to buyout businesses and take stakes in companies. They will continue to do so at a higher pace after they raise the IPO proceeds.

     

    This is a nice transition to the second point, the company has grown total debt from $210 million in 2012 to $6.5 billion in 2013. This reflects over 100% equity on a pro forma basis.

     

    Alibaba is interesting.....a lot of stuff to read over in this initial F-1 prospectus....
    7 May 2014, 10:57 AM Reply Like
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