There have been few New York-listed IPOs as blockbuster as Alibaba, and now it’s going home.
Shares in Chinese e-commerce leader Alibaba (NYSE:BABA) had spiked 6.45 by mid-day trading on news from the Wall Street Journal that it is considering listing in China, and it might happen as soon as this summer.
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Three years ago, Alibaba stormed the market with a record $25-billion IPO on the New York Stock Exchange.
And stocks are now soaring again because a second listing in China would open it up to additional capital-raising opportunities and boost its profile in the company’s homeland.
Alibaba is a giant not only in technology, but in e-commerce, and is often referred to as the Asian Amazon—expect that its listing hasn’t been Asian at all.
In January, Alibaba founder—Jack Ma—said the company was considering an Asian listing, but the target then wasn’t mainland China, it was Hong Kong.
It would have been Hong Kong in 2014, but they rejected Alibaba’s governance structure, pushing them instead to New York.
Investors in China haven’t been able to take advantage of Alibaba’s e-commerce bull run. At the time of its NYSE listing in 2014, Alibaba wasn’t prepared to take on the strict Chinese regulatory environment.
So what’s changed?
For one thing, China is making moves to attract foreign capital, and it’s particularly courting big tech companies.
It’s all about offering faster IPOs for tech companies, Reuters reported in February. In other words, Beijing is preparing to offer Alibaba a shortcut to the front of the line. Related: Amazon’s Bid For A Monopoly On Everything
Alongside Alibaba, the Chinese would also likely be targeting Ant Financial, a $60-billion Alibaba Group fintech affiliate. Online property and casualty insurance provider Zhong is also on the lure list, along with Quihoo 360 Technology Co., a security software maker.
Few companies have seen such remarkable growth as Alibaba, which not only has a high-growth core business, but also invests heavily in everything from financial services and smart vehicles to artificial intelligence and digital media. This year is expected to be another record-breaker, with some analysts calling for 49-percent EPS growth and 65-percent net sales growth.
Wall Street loves it, and Beijing will love it, too.
It’s the perfect time to Alibaba to hit up China. The country is rebooting retail, and online sales in China have grown 37 percent in just the first two months of this year, as e-commerce skyrockets.
Alibaba generated an unbelievable $25.3 billion in revenue in a single 24-hour shopping holiday in China last November. It’s breaking its own records left and right. In the fourth quarter of 2017, profits were up 146 percent to $2.6 billion.
Alibaba already controls some 60 percent of the Chinese market, with more than 1 million customers. It could even give Amazon a run for its money in terms of valuation. While BABA is at $509 billion as of Thursday, compared to Amazon’s $700 billion, home market demand is pushing Alibaba forward—fast.
By Charles Benavidez for Safehaven.com
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