The company’s prospectus confirms what Yahoo investors already knew: Alibaba is huge.
China Daily China Daily Infor / Reuters
Alibaba, the Chinese ecommerce company in which Yahoo owns a 20% stake, has filed to raise up to $1 billion in an initial public offering.
The company, which has been responsible for the majority of Yahoo's value in recent years, filed its IPO documents after the close of trading Tuesday, setting off one of the most highly-anticipated public offerings in the technology sector since Facebook.
Alibaba, which has seen its business continue to grow at a jaw-dropping pace, plans to raise up to $1 billion in its IPO. Underwriting the offering are investment banks Goldman Sachs, J.P. Morgan, Morgan Stanley, and others. The company did not specify which market it would list on, the New York Stock Exchange or the Nasdaq, or its ticker symbol. Nor did the filing include the number of shares Alibaba intends to offer for sale and at what price range, so determining how much its investors — and Yahoo in particular — stand to make from the offering could not be determined.
In the nine months ending December 2013, Alibaba brought in $6.5 billion in revenue — with around $5.7 billion of that coming from commerce in China. The majority of its revenue comes from its commerce applications that include Taobao Marketplace, one of China's largest online commerce services, and Tmall, China's largest third-party commerce platform that retailers use to sell their products.
Off that revenue, Alibaba made $2.9 billion in income — meaning the company, despite being focused in commerce, has shown it is able to make a lot of money off its operations. The company also has nearly $8 billion in cash to continue expanding its operations.
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