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Stocks

China's Alibaba seen topping Facebook with upcoming IPO

SILICON VALLEY -- Anticipation is growing in the stock market that Chinese e-commerce giant Alibaba Group Holding will rake in more cash than any other Internet company, including Facebook, when it goes public in the U.S.

     Alibaba is preparing to list either on the New York Stock Exchange or the Nasdaq, with an application likely to be submitted as early as this month.

     Currently, the largest amount raised by an Internet company through an initial public offering is the $16 billion Facebook rang up in 2012. Many market players see Alibaba pulling in at least $15 billion based on its corporate value and other factors.

     The company's earnings have been growing steadily and its profitability has been improving, so the IPO price and number of shares offered may exceed initial projections. This had led to the view that it will raise nearly $20 billion, with some analysts putting its post-IPO market capitalization at $250 billion.

     Alibaba's revenue for the October-December quarter spiked 66% on the year, according to Yahoo!, which owns a 24% stake in the Chinese company. Its operating profit margin rose 10 percentage points to about 54%. And net profit more than doubled to $1.3 billion.

     Gross merchandise sales at China's largest e-commerce company likely reached 25 trillion yen ($241 billion) last year, with the figure roughly doubling every year over the past decade. It sells more products than U.S. giants Amazon.com and eBay combined. Because Alibaba does not sell its own products but acts as a middleman, it enjoys a high profit margin even though its revenue is only about a tenth of Amazon's.

     Alibaba had initially planned to go public in Hong Kong, but changed its mind because local authorities did not permit a partnership control structure in which a select group of people, including the company's founder and executives, hold more power than ordinary shareholders.

 

 

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