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Alibaba IPO could make history

The Chinese eCommerce platform had its IPO this week, selling 93.7 million American depositary shares. JD’s initial valuation is actually higher than that of Amazon, at $26 billion; share prices on Nasdaq rose more than 10% on Thursday to $21.13. This all sets an encouraging precedent for Alibaba, whose impending IPO looks set to be one of the largest in history. According to TechRadar, forecasts for Alibaba’s IPO “even threaten to put the flotations of Facebook and Twitter in the shade.”

“The IPO is somewhat of a preview for Alibaba,” a Wedbush analyst told MarketWatch, “though Alibaba appears to be more respected and powerful within the Chinese e-commerce market. I believe the valuation at the end of the day will be a proxy for the minimal valuation for Alibaba when it goes public.”

Alibaba’s precise valuation figure is subject to speculation, with estimates ranging from $115 to $245 billion. Says IG analyst Chris Beauchamp: “Alibaba not only has a track record of excellent growth in China, a country where internet penetration is much lower than in the US, providing opportunity for yet more sales growth, but it has a much wider operating margin than Facebook and Google, at 50% versus 37% and 28% for these other firms.”

The company is a household name in China but is less well known in the Western world. However, Kevin Kelleher at Pando Daily believes that could all be about to change: “Alibaba remains an unknown quantity, but from the outside the company has all the signs of a rising technology star. Until now, the company’s planned IPO has been discussed as something interesting… but it may well be that the Alibaba IPO becomes much more than that. It could decide the fate of the tech IPO market this year – and in doing so it could decide the direction of many tech stocks.”

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