A must-read look at Alibaba Group Holding’s upcoming IPO

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The IPO may value Alibaba at more than $200 billion

Alibaba Group Holding Limited, commonly known as Alibaba, is a Chinese e-Commerce player. It’s the largest online and mobile commerce company in the world in terms of gross merchandise volumes (or GMV) as of 2013, according to the company’s latest F-1 filings.

It has recently gotten a lot of media attention because of its impending initial public offering (or IPO) in the U.S. Alibaba may IPO as early as next week and could raise more than $20 billion, according to Wall Street Journal.

This will be one of the biggest IPOs in the recent history of the U.S. stock market. The IPO may value Alibaba at more than $200 billion, which would be closer to the combined market cap of eBay (EBAY) and Amazon (AMZN) at $225 billion.

SoftBank (SFTBF) and Yahoo (YHOO) are the largest shareholders in Alibaba. Yahoo currently holds a 23% stake in Alibaba, but it will need to reduce its stake when Alibaba goes public.

Alibaba GMV growth

Alibaba’s entry into the U.S. e-Commerce market will make it more competitive

According to company filings and as the chart above shows, although Alibaba’s GMV year-over-year growth rate has declined from 65% in 2Q13 to 45% in 2Q14 due to the larger base effect, it’s nonetheless healthy growth.

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Alibaba recently launched its U.S. shopping website named 11Main.com to create more competitive pressure on eBay and Amazon. Alibaba could also use its IPO proceeds to acquire smaller U.S.-based e-Commerce companies. The U.S. e-Commerce market is getting more competitive, with Google (GOOG) (GOOGL) also recently starting its same-day shopping service named Google Shopping Express service.

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