China’s largest e-commerce company has raised its own estimate of its value to $130 billion in advance of its highly anticipated IPO. But Alibaba Group Holding Ltd. likely will be valued at well above that figure when it goes public in the New York Stock Exchange in the coming months, an analyst says.
Alibaba filed a document with the U.S. Securities and Exchange Commission on Friday that raised its estimate of the fair market value of a share in the company to $56 from its previous estimate of $50. Based on Alibaba’s statement that there were 2,327,539,776 ordinary shares outstanding as of March 31 that would raise the value of the company to just over $130 billion from $116 billion.
But that $56 figure is probably conservative, and looks at the value of Alibaba based on past performance, not future prospects, says R.J. Hottovy, an analyst at stock research firm Morningstar Inc. who last month estimated that Alibaba would be worth $220 billion when it goes public in the next few months.
“You’ll probably see the markets reward them with a much higher valuation” than the $130 billion figure, Hottovy says today. “We remain pretty comfortable with our estimates.”
At $130 billion, Alibaba would have a stock market value twice that of eBay Inc. At Morningstar’s $220 billion estimate, the Chinese company would be worth more thanAmazon.com Inc.(Alibaba versus Amazon http://www.internetretailer.com/2013/11/22/comparing-e-commerce-giants-alibaba-and-amazon) ($163 billion) and Facebook Inc. ($174 billion.)
Alibaba claims that its e-commerce platforms make it “the largest online and mobile commerce company in the world in terms of gross merchandise volume,” which is the value of goods sold on its web sites. Purchases on its three Chinese e-commerce sites totaled $270 billion in the fiscal year ended March 31, 2014, giving Alibaba more than an 80% market share in online retail sales in China. During that fiscal year, Alibaba says, 255 million buyers and 8 million sellers transacted on Alibaba sites.
Its three marketplaces in China are Taobao, which is open to any legal China resident; Tmall, which hosts stores from registered businesses, including such foreign brands as Gap, Apple and Nike; and group-buying site Juhuasuan.
Alibaba generated $3.764 billion in net income in its fiscal year ended March 31, up 170% from the prior fiscal year, on revenue of $8.45 billion, an increase of 52.1% from revenue of $5.56 in the prior year.
Alibaba plans to use the stock symbol BABA when it starts selling its shares on the New York Stock Exchange. It has not said when it will go public, but analysts expect it will be within the next couple of months. Alibaba announced plans for its IPO on a U.S. stock market in May.