Sep. 19, 2014, 6:15 PM
- With a market cap of $233.9B as of today's close, Alibaba (NYSE:BABA) is the 4th-most valuable tech company on the planet, behind only Apple, Google, and Microsoft. Nonetheless, many on the Street have argued shares are fairly valued or undervalued.
- Cantor, which started coverage with a Buy and $90 target earlier this week: "We believe that a differentiated pricing model, strong brand, and unmatched scale give Alibaba an unfair competitive advantage relative to peers ... While the stock's not cheap, we believe the company's outsized growth and margin profiles, if sustained, should support higher valuation over time."
- Wedbush, whose $80 target has already been surpassed, thinks "Chinese e-commerce appears to have room to grow at 30%+ for several years." CRT Capital's $95 target implies a multiple of 26x 2016E EPS, something it considers justified given a 35%+ revenue CAGR is forecast for 2014-2017.
- On SA, Triton Research observes Alibaba's 2013 marketplace revenue as a % of GMV (3.1%) was a tiny fraction of eBay's (19.3%), leaving plenty of room for growth even if eBay-like monetization isn't feasible in China.
- Value Record is more cautious, viewing Alibaba's VIE legal structure as a risk and questioning how successful its international expansion plans will be - Baidu and many other Chinese Web names have had a rough time trying to replicate their domestic success.
- Yahoo (YHOO -2.7%) closed lower, albeit off the day's lows. With shorts having trouble borrowing Alibaba shares, some may have settled for shorting Yahoo instead.
- Josh Brown thinks Yahoo's pending IPO windfall and large remaining Alibaba stake once more make it a prime target for an activist. "There is absolutely no way, in my opinion, they're going to allow this management team, this board of directors to take $6 billion, do a buyback and then have another free $6 billion in cash to experiment."
Sep. 19, 2014, 12:10 PM
- After peaking at $99.70, Alibaba (NYSE:BABA) has reversed course and is now at $92.14, slightly below an opening trade of $92.70. Shares are still 35.5% above their $68 IPO price.
- Yahoo (YHOO -3.5%) has reversed course as well. 121M Alibaba shares have already changed hands. Yahoo's volume for the day has reached 90M, more than 3x the company's daily average.
- Prior Alibaba coverage
Sep. 19, 2014, 12:01 PM
- Alibaba (NYSE:BABA) opened at $92.70 and has quickly jumped to at $99, up 45.6% from a $68 IPO price. Its market cap stands at a whopping $246.6B (66x FY14 EPS), as investors bet the company's strong top-line growth (46% Y/Y in Q2) won't let up.
- Yahoo (YHOO +1.2%) remains higher. With underwriters expected to exercise a 15% overallotment option, the company will be selling 140M shares through the IPO, good for pre-tax proceeds of $9.5B.
- SoftBank's (OTCPK:SFTBF) 797.7M-share stake has a current pre-tax value of $79B.
- Prior Alibaba coverage
- Prospectus, IPO preview
Sep. 19, 2014, 10:14 AM
- All signs suggest Alibaba (NYSE:BABA) will open well above its $68 IPO price. At $80/share, the company would be worth $197B.
- Yahoo (YHOO +1.4%) is trading higher. Shares have already priced in some positive Alibaba-related news since mid-July.
- Update (10:21 AM): Alibaba is now indicated to open in an $82-$85 range.
- Update 2 (10:30 AM): The range is now up to $84-$87.
- Update 3 (10:44 AM): It's now up to $86-$88.
Sep. 18, 2014, 5:30 PM
- Alibaba's (Pending:BABA) IPO price is at the high end of a $66-$68 range. The Chinese e-commerce giant is valued at $167.6B - 20x FY14 (ended March '14) sales and 45x FY14 earnings.
- Yahoo (NASDAQ:YHOO) +0.5% AH. Alibaba begins trading tomorrow.
- Related tickers: OTCPK:SFTBF, OTCPK:SFTBY
- Prior Alibaba coverage, prospectus
Sep. 18, 2014, 3:12 PM
Sep. 18, 2014, 11:19 AM
- CNBC reports Alibaba (Pending:BABA) plans to price its IPO within its elevated $66-$68 range, and that advisors have recommended a $68 price.
- At $68, Alibaba would be worth $167.6B. IPO proceeds would total $21.8B, of which $8.4B would go to Alibaba itself (minus underwriter fees). Official pricing is expected later today.
- Yahoo (YHOO -1.4%) has slipped on the report. The company is selling 121.7M shares through the IPO (worth $8.3B pre-tax at $68), and will be left with 401.8M afterwards (worth $27.3B pre-tax, and good for a 16.3% stake).
Sep. 12, 2014, 5:12 PM
- Yahoo (NASDAQ:YHOO) climbed 3.9% today to close at its highest level since Jan. 2006 and has now gained 8.3% since Sept. 5, when reports of the timing and pricing of the Alibaba IPO surfaced.
- YHOO, which owns a ~23% stake in Alibaba, is expected to sell 140M of the shares in the IPO next week, which should net ~$8.8B in proceeds to the company, according to Cantor Fitzgerald.
- But there's also potential danger for YHOO: Alibaba is widely known to have been the main reason why many YHOO investors have held on to their shares, and some analysts say much of YHOO’s value is based on Alibaba.
Sep. 12, 2014, 8:10 AM
- Two Mexican companies, Worldwide Directories and Ideas Interactivas, have sued Yahoo (NASDAQ:YHOO) and law firm Baker & McKenzie, alleging that they enlisted the help of a senior Mexican judge and other court personnel to avoid a $2.7B judgment issued by a Mexican court in 2012.
- The two companies originally sued Yahoo over an online search project in 2011, saying the tech company breached its duties by terminating agreements prematurely. The lawsuit resulted in a $2.7B preliminary judgment.
- Worldwide Directories and Ideas Interactivas now claim that Yahoo and Baker & McKenzie engineered a conspiracy to reduced that award to $172,500. A Yahoo spokeswoman calls the lawsuit "meritless."
Sep. 11, 2014, 7:15 PM
- The U.S. government threatened to slap fines of $250K/day against Yahoo (NASDAQ:YHOO) in 2008 if the company didn't comply with a demand to hand over user data, according to the Washington Post.
- The report provides details from documents unsealed today showing an ultimately unsuccessful legal battle by YHOO to resist the government's demands.
- The documents show how federal officials forced U.S. tech companies to participate in the National Security Agency's PRISM surveillance program.
Sep. 10, 2014, 10:40 PM
- The guessing game has started over which U.S. companies Alibaba (Pending:BABA) might pursue after it becomes flush with IPO cash.
- If Alibaba's borrowing power is factored in, estimates for its total spending capacity range as high as $50B.
- Lion's Gate (NYSE:LGF), Red Hat (NYSE:RHT), and Akamai Technologies (NASDAQ:AKAM) have all been bantered around as potential targets.
- Though a long shot, the case for Yahoo (NASDAQ:YHOO) being in the mix is also intriguing. There's $12B in tax savings generated from Alibaba buying Yahoo - instead of Yahoo selling off its post-IPO stake in the Chinese company and paying the tax bill.
- Alibaba debuts on the NYSE on September 19.
Sep. 8, 2014, 3:54 PM
- In what may be the first coverage of Alibaba (Pending:BABA), Atlantic Equities' James Cordwell - expecting the company to continue to gobble up share - rates the stock Overweight with $100 price target (current IPO price range is $60-$66).
- The biggest risk to the outlook, he says, is Alibaba not owning fulfillment centers. It's an approach that has worked well so far, says Cordwell, "but that could become a weakness as competitors extend their in-house capabilities.”
- As for Yahoo (YHOO +5.4%), Cantor's Youssef Squali says the company should end up with about $8.8B in gross proceeds and $5.7B net (though tax treatment could increase this amount) after selling 140M shares of its 523.6M share stake in Alibaba. He's got a Buy rating and $39 price target on Yahoo, but thinks the Alibaba IPO could boost the stock to $49.
Sep. 5, 2014, 7:04 PM
- Yahoo (NASDAQ:YHOO) is adding to its Friday gains in response to Alibaba's setting of an $60-$66 IPO price range that spells a $147.9B-$162.7B valuation range, which in turn gives Yahoo's 523.6M-share stake a $33B pre-tax valuation at the midpoint.
- Of interest: While Yahoo can be required to sell 140M shares at IPO time (down from a prior 208M, thanks to a recent deal amendment), Alibaba's prospectus only states Yahoo is selling 121.7M through the offering, thereby leaving it with a 16.3% post-IPO stake.
- If 140M shares are sold, Yahoo stands to reap pre-tax proceeds of $8.8B at the midpoint; if 121.7M are sold, proceeds total $7.7B. Yahoo has already promised to return at least half the post-tax proceeds to shareholders.
- Given huge investor interest, there's a healthy chance Alibaba will hike its price range before the IPO, which will reportedly arrive on Sep. 19.
Sep. 5, 2014, 4:05 PM
- Alibaba (Pending:BABA) has set a $60-$66 IPO price range. That spells a valuation range of $147.9B-$162.7B. The company is looking to offer 320.1M shares - 123.1M new shares, and 197M on behalf of existing holders. At the midpoint of the range, proceeds from the new shares would total $7.7B. (prospectus)
- Yahoo (YHOO +1%) is obligated to sell up to 140M Alibaba shares at IPO time. At the midpoint, that would spell proceeds of $8.8B. Its total stake would be valued at $33B pre-tax, and SoftBank's (OTCPK:SFTBF, OTCPK:SFTBY) at $50.2B. Yahoo has moved higher on the news.
- Earlier: Alibaba to reportedly start trading on Sep. 19
Sep. 5, 2014, 11:57 AM
- CNBC reports Alibaba (Pending:BABA) will price its IPO on Thursday, Sep. 18, and begin trading the next day. That fits with recent reports from the WSJ and NYT.
- The NYT reports today Alibaba's roadshow will start in NYC on Monday. No word yet on the price/valuation range sought by the Chinese e-commerce giant - plenty of analysts have assigned valuations above $150B.
- Yahoo (YHOO +1%) has ticked higher following the report.
- Related tickers: OTCPK:SFTBF, OTCPK:SFTBY
Aug. 27, 2014, 1:12 PM
- With its Q2 results disclosed, Alibaba (Pending:BABA) is expected to provide an IPO price range "as soon as Tuesday," the NYT reports.
- After setting a price range, Alibaba will reportedly kick off a 2-week roadshow (covering both Asia and the U.S.) ahead of an IPO the company hopes will take place during the week of Sep. 15.
- Sources caution the Chinese e-commerce giant's plans could still change. The NYT previously reported Alibaba was planning an IPO "sometime after Labor Day." At one point, the company was rumored to be eying an early-August IPO.
- Yahoo (YHOO +0.7%) continues to trade modestly higher.
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