Alibaba Closes in on IPO

 | Apr 23, 2014 | 11:30 AM EDT  | Comments
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There was a report earlier this week in Reuters that Alibaba Group might file for its initial public offering as early as next Monday. However, a report out of China late Sunday said that the filing had been pushed back another week. I believe we can expect an Alibaba filing early next week.

This morning, another report out of China citing agency documents suggested that Alibaba would seek a $153 billion valuation when it debuts on U.S. markets. We will have to see where the deal is actually priced once the roadshow is completed. It's premature to assess what the price will be at the time of the IPO. That is only known after all the give-and-take between the institutional investors and the underwriters of the deal.

But it seems likely that the $150 billion number is the company's starting place in terms of valuation. We will see, but my guess is that it probably can only go up from there, assuming that the markets hang in there.

Once the IPO filing is made (again, I believe it will be next week) expect a lot of excitement and buzz. We've already had a preview of what to expect after last week's Yahoo! (YHOO) earnings. Yahoo! disclosed Alibaba's fourth-quarter results of $3.06 billion in revenue and $1.35 billion in net income.

For comparison's sake, in the same quarter, Facebook (FB) booked $2.59 billion in revenue and $523 million in net income.

These Alibaba numbers are huge relative to Facebook. Most investors don't seem to realize that yet. Facebook is trading at a $160 billion valuation, and we are wondering if Alibaba will get a $153 billion valuation when it had a much stronger fourth quarter.

My guess is that once the IPO is filed, Yahoo! shares will jump in reaction to people getting a clearer picture of Alibaba's value. Then there might be a pull back, if investors try to fade that initial move.

As the process toward an IPO progresses, though, I expect that Yahoo!, with its 24% ownership in Alibaba, to continue slowly moving up.

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