The WSJ reports, "Alibaba Group Holding filed for an initial public offering late Tuesday. Shares of Yahoo, which owns a 22.6% stake in the Chinese e-commerce giant and has been the primary way for U.S. investors to participate in its growth, slid the following day.
Alibaba's filing showed it had 231 million active buyers and sales of $248 billion across its three retail sites in 2013. It also disclosed that last month, the company valued itself at $121 billion, including stock-based compensation and the conversion of certain preferred shares. Analyst estimates for its valuation range from $136 billion to $250 billion. Beyond that, though, the filing was scant on details investors crave, such as a breakdown of Alibaba's individual business units and more information about affiliate Alipay.
That is actually underwhelming for Yahoo's investors because Alibaba has already juiced the U.S. company's shares. These are up 122% over the past two years, against 38% for the Nasdaq Composite. Alibaba's growth explains most of this given that Yahoo's core Internet advertising business has faced declining revenues.
Granted, Yahoo only has to part with about 9% of Alibaba in the IPO. It can retain the rest of its stake, the value of which could continue to bolster its stock.
Alibaba's filing merely confirmed the excitement already baked into Yahoo's valuation. It has also brought home the reality that Yahoo's days as a Chinese e-commerce tracking stock are numbered.
