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China Businesses The Almighty Buck

Why a Chinese Company Is the Biggest IPO Ever In the US 191

Posted by timothy from the visible-from-space dept.
An anonymous reader writes The Chinese e-commerce giant Alibaba has made headlines lately in US financial news. At the closing of its Initial Public Offering (IPO) on Friday, it had raised $21.8 billion on the New York Stock Exchange, larger even than Visa's ($17.9 billion), Facebook's ($16 billion), and General Motors ($15.8 billion) IPOs. Some critics do say that Alibaba's share price will plummet from its current value of $93.60 in the same way that Facebook's and Twitter's plummeted dramatically after initial offerings. Before we speculate, however, we should take note of what Alibaba is exactly. Beyond the likes of Amazon and eBay, Alibaba apparently links average consumers directly to manufacturers, which is handy for an economy ripe for change. Approximately half of Alibaba's shares "were sold to 25 investment firms", and "most of the shares went to US investors."
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Why a Chinese Company Is the Biggest IPO Ever In the US More

Why a Chinese Company Is the Biggest IPO Ever In the US

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  • Name (Score:1, Redundant)

    by rossdee ( 243626 )

    I think Alibaba is a stupid namr.
    The first thing I think of is "Alibaba and the 40 thieves"

  • Why? Because (Score:1)

    by Anonymous Coward

    Because it could enlist in the US without changing it's management structure. The US financial regulations don't hinder the execution of family values.

  • 1) US prints money and invests in China
    2) China builds stuff
    3) US buys stuff.
    4) China buys US stocks/bonds/securities.
    5) US invests in China - stock
    GOTO #2

    Profits are somewhere in there. Eventually the banks will figure out that you can just bounce between #4 & #5. Profits come with bailouts.

  • Don't buy/invest in mainland China (if you can) (Score:5, Insightful)

    by wisebabo ( 638845 ) on Friday September 19, 2014 @11:06PM (#47951771) Journal

    I know that this is a hard choice (especially since I heard Alibaba has soared by 38% in its first day) but please consider the following:

    About 5 years ago I stopped investing in Chinese companies. Why? Because I didn't want to support even indirectly a regime that, without apology, oppressed Tibet and supported the despotic regime of North Korea. I hold them largely responsible for sacrificing millions of my long-separated brothers (yes, I'm ethnic Korean) through starvation and torture simply to keep a "buffer state" in between them and the "capitalist" (ha ha, what irony) South Korea and U.S.

    My stance was only hardened by their support, for purely geopolitical/economic considerations (OIL), of Syria and Iran (and, I think Libya). They and Russia have kept those regimes propped up and have made the tragedies in the Middle East even worse (of course America started it but at least we know now that most of us were idiots to be led by one). That's not to mention the authoritarian and despotic regimes that the Chinese GOVERNMENT is supporting in Africa purely for their resources.

    Look, I know the West (and especially the U.S.) have done a LOT of bad things but the Chinese government doesn't even make a pretense of things like human rights, even in their own country. As I've said, they've been willing to sacrifice millions for a modicum of security (they could've asked the U.S. and S. Korea if, in return for not letting the Kims return to North Korea from one of their trips to China, we would promise not to put American troops north of the 38th parallel. As if S. Korea would even want American troops on the peninsula once the threat was gone). Now, living in S.E. Asia, I see firsthand how the Chinese government with its growing power is throwing away treaties and agreements it has signed in order to bully the Vietnamese and Philippines with their ridiculous "cow tongue" shaped demarcation of the seas. They are returning to 19th century "gunboat" diplomacy in the 21 century world.

    I fear that as China grows ever stronger, they will continue to discard previous commitments to peace and will literally force their will upon the world. Is that what you want to support? I'm a realist, and I love my gadgets and my improved standard of living brought on by the flood of low-cost Chinese products (often produced with stolen patents and technologies but that's another story) and I'm not quite ready to live without. However, when there's a choice, when you can purchase something that is identical (hopefully) in every way including price to another but one is made in China and one was made in Sweden(?), I hope you'll make the same choice I do.

    If the Chinese government, not the U.S. government had the power the NSA has; would any of us have any protection at all? Think of what kind of world that would be to live in. (That's what 1.2 billion people ARE living in).

    (If you're wondering why I'm advocating not buying/investing in China and hurting Chinese citizens as opposed to just their government, remember that the world boycotted South Africa during their Apartheid regime even though it undoubtedly hurt many whites and blacks who were good people. And it worked.)

    • Re: (Score:3, Informative)

      by eclectro ( 227083 )

      they will continue to discard previous commitments to peace and will literally force their will upon the world.

      I think people who are investing in Chinese companies are forgetting one thing. China could easily become an aggressor much the same way Russia is with the Ukraine. If China were to get in a war with Japan over Japan's northern islands, the share value of these companies could evaporate overnight.

      As much as investing in BRICs [wikipedia.org] is tempting, it can not be forgotten that most of these places are not democracies.

      • Re: (Score:1)

        by Anonymous Coward

        Brazil and India are certainly democracies.. and Russia nominally is one.

      • China could easily become an aggressor much the same way Russia is with the Ukraine.

        Or the way the US is/was with Afghanistan, Libya, Iraq, Vietnam, Panama, Cuba (Bay of Pigs), etc. Furthermore have you forgotten how the US was founded? (Hint, it wasn't populated with white people 200 years ago.) Have you forgotten the number of dictators that the US has installed and supported including but not limited to [wikipedia.org] Saddam Hussein, Francisco Franco, Hosni Mubarak, Augusto Pinochet and many many more.

        Let's not pretend the US has been some paragon of virtue over the years, shall we?

        If China were to get in a war with Japan over Japan's northern islands, the share value of these companies could evaporate overnight.

        If that happens,

      • So? Neither are our democracies anymore.

    • China has arguably moved from communism to fascism [opendemocracy.net] and as Mussolini stated "Fascism should more properly be called corporatism because it is the merger of state and corporate power." One can see many of the tenants of an oligarch's paradise: a single party police/surveillance state, labor unions are outlawed, environmental regulations are practically non-existent, imminent domain is abused, and there is an income inequality that even surpasses the US. Capitalism has chosen the most profitable government

      • Re: (Score:2, Insightful)

        by manwargi ( 1361031 )

        From the wiki link,

        The election of Roosevelt was upsetting for many conservative businessmen of the time, his "campaign promise that the government would provide jobs for all the unemployed had the perverse effect of creating a new wave of unemployment by businessmen frightened by fears of socialism and reckless government spending."

        Boy, the more things change the more they stay the same.

        • Yeah, but Roosevelt didn't fix the Great Depression, WW2 did.

          And before WW2, our Government was in a much better position than it is now --- which is arguably in the bind it is in, from an unholy combination of military spending (Republicans love this) and from poor Medicare/D/SS design and paying government/civil workers too much and giving many of them overly-generous retirement packages after just 20 years work (Democrats love all of this).

          The USPS, after it was spun off, reformed its pension plan, and w

      • Profit trumps ethics.

      • One can see many of the tenants of an oligarch's paradise

        Well, I know I'd rent from an oligarch's paradise, so I don't see why they wouldn't have a lot of tenants.

        Or did you mean "tenets"? Never mind.

      • Re: (Score:2)

        by khallow ( 566160 )
        Funny how a lot of the people who are enamored of the Chinese model, aren't capitalists. The real attraction is for stoking authoritarian fantasies of all flavors. Want a high speed rail or massive infrastructure/social safety net projects? China made it happen. That's your authoritarian socialist viewpoint.

        Want favorable or unique business advantages or just doing away with the arbitrary rules imposed by the thoughtless masses? Just think what profit you could make with the power available to the Chines

    • China screws foreigners (Score:1)

      by Anonymous Coward

      I was going to say that China screws foreigners. Companies that want to do business in China have to bribe the local officials, and trade away intellectual property. The government will make up regulations that favor local manufacturers. In addition, China has lots of spies steal foreign technology.

    • As Chinese economy grows, so does its middle class. As its middle class grows, it demands more democratic reforms and more government responsibility - ultimately, a way to better China, for both its people and its neighbors.

      So if you want a better China, you should do the exact opposite of what you're doing.

      • As Chinese economy grows, so does its middle class. As its middle class grows, it demands more democratic reforms and more government responsibility

        Well, maybe. Or maybe it just demands a higher standard of living, one which cannot be supported without more oppression.

      • As Chinese economy grows, so does its middle class. As its middle class grows, it demands more democratic reforms and more government responsibility - ultimately, a way to better China, for both its people and its neighbors.

        That was the Nixon/Kissinger theory of the 1960s/70s. It was used to cut China all sort of political and economic slack. It was proven wrong by the 1989 Tiananmen Square Massacre.

        So if you want a better China, you should do the exact opposite of what you're doing.

        No. If you want a better China then the US should treat China as China treats the US. Have reciprocal economic and trade policies, punitive measures for egregious behavior, ... No more cutting them slack hoping they will moderate over time, no more treating them like they are an impoverished developing nation, ... To create an envi

        • That was the Nixon/Kissinger theory of the 1960s/70s. It was used to cut China all sort of political and economic slack. It was proven wrong by the 1989 Tiananmen Square Massacre.

          Was it, though? China circa 1960s/70s was a totalitarian dictatorship where Tiananmen square was an impossibility simply because any dissent would be crushed long before it would get to mass protest stage, and the yearly number of victims was far greater, too. Compared to China after Tiananmen, the latter is far more liberal. It's even more liberal today.

          If you want a better China then the US should treat China as China treats the US. Have reciprocal economic and trade policies, punitive measures for egregious behavior, ... No more cutting them slack hoping they will moderate over time, no more treating them like they are an impoverished developing nation,

          I did not suggest doing such a thing. The best thing you can do is just trade (and yes, this doesn't preclude e.g. tariffs to even out the price of labor d

      • China circumvented that by arriving already at where the US is still heading: A rather small sliver of rich people oppressing a mass of poor ones, while at the same time ensuring that there is little upwards mobility, but just enough to create the odd success story to keep everyone believing in the dream.

        That way you can effectively eliminate a middle class. But don't worry, the US is working hard to get rid of what's left of its middle class, then the two countries will be on par again.

        • Did you see the stats for the growth of their middle class over the past 15 years or so?

          I'm not disputing that the country is ardently capitalist and has tightly guarded elite circles. But for most people in there, that's not where they are aiming for. What they want is basically just comfortable living, and their standard for it is getting pretty close to what the West enjoys. And with every new generation, there are millions more actually enjoying it - even though there's still hundreds of millions locked

    • Re: (Score:1)

      by Anonymous Coward

      What comes to mind is an engineering company I worked as a contractor for in the early 2000s. They were looking to see about a factory in China, since California isn't exactly a state that likes physical stuff being made, even back around 9/11.

      Well, during the negotiations the corporate officers abroad visiting were arrested for some vague charge, and it was told to the CEO that they either would be put in a Chinese prison for 20 years, or the company would set up a venture, on Chinese terms, with 51% owne

      • Interesting, given that WFOEs (Wholly Foreign-Owned Entities) have existed in China since 2000. You can start an LLC (companies to be traded on domestic Chinese markets do not quality) with 100% foreign ownership.

    • Business first, politics second.

    • About 5 years ago I stopped investing in Chinese companies. Why? Because I didn't want to support even indirectly a regime that, without apology, oppressed Tibet...

      Yeah, I thought the same thing too... but then I found out that the people who ruled Tibet before China were not exactly wonderful to live under either.

      Really, it is a wash for the people of Tibet: Live under one tyranny or live under another.

  • more direct connection to producers (Score:5, Interesting)

    by Anonymous Coward on Friday September 19, 2014 @11:11PM (#47951791)

    The reason Alibaba will take over from Amazon and Ebay is simple. Two things.

    First, scale. It moves more product than Amazon and Ebay COMBINED, and that's before even entering the US market. The network effect will dominate.

    Second the vast majority of what Amazon and (especially!) Ebay sells is made in factories in China anyway. Alibaba will allow cheaper prices for the same products without having to go through the middlemen and let Ama/Eba skim off profits in the middle.

    If i can buy a part directly from the manufacturer in China for $3.99, I'm not going to pay $11.99 for Amazon to deliver it to me or even $5.99 for an Ebay reseller.

    Alibaba will have a price advantage on the other big players, and that's what'll matter in the end.

    I sure wouldn't be wanting to hang onto Amazon or Ebay stock right now (assuming either have stock, sorry I don't keep track of things like that).

    • Re:more direct connection to producers (Score:4, Insightful)

      by David_Hart ( 1184661 ) on Friday September 19, 2014 @11:34PM (#47951873)

      The reason Alibaba will take over from Amazon and Ebay is simple. Two things.

      First, scale. It moves more product than Amazon and Ebay COMBINED, and that's before even entering the US market. The network effect will dominate.

      Second the vast majority of what Amazon and (especially!) Ebay sells is made in factories in China anyway. Alibaba will allow cheaper prices for the same products without having to go through the middlemen and let Ama/Eba skim off profits in the middle.

      If i can buy a part directly from the manufacturer in China for $3.99, I'm not going to pay $11.99 for Amazon to deliver it to me or even $5.99 for an Ebay reseller.

      Alibaba will have a price advantage on the other big players, and that's what'll matter in the end.

      I sure wouldn't be wanting to hang onto Amazon or Ebay stock right now (assuming either have stock, sorry I don't keep track of things like that).

      Right... So, people have stopped buying monitors from Dell simply because they can buy similar Korean monitors direct on eBay? No? Oh, right, because people like to have warranties and have the ability to get stuff replaced in a timely manner when it fails.

      Also, you're wrong about Alibaba's business model today. They are the middle men between the manufacturer and the storefront. They do have an eBay style system, but it's used by independents, not Alibaba, to sell products. And yes, they also have a Paypal type service, but it would have to clear a large number of hurdles to become trusted in the US.

      • Re:more direct connection to producers (Score:4, Insightful)

        by mister_playboy ( 1474163 ) on Saturday September 20, 2014 @12:31AM (#47952011)

        And yes, they also have a Paypal type service, but it would have to clear a large number of hurdles to become trusted in the US.

        Lack of trust certainly hasn't kept Paypal from being popular.

        Just read the countless stories... they can do pracatically anything they want with the money in "your" PP account.

      • It's true that customers enjoy a lot less protection on Alibaba. In the end, you'll have to weigh risk against savings and convenience. In some cases, the warranty does not matter that much if you can get the item a lot cheaper.

        Some sellers on Alibaba offer some sort of warranty. I ordered 8 motorized ball valves from a factory through Alibaba (these things are hard to get here as they are not aimed at consumers, and priced at €250 a pop. Same item from China: $40). One of them appeared to be l

      • Right... So, people have stopped buying monitors from Dell simply because they can buy similar Korean monitors direct on eBay? No? Oh, right, because people like to have warranties and have the ability to get stuff replaced in a timely manner when it fails.

        I have stopped buying electronics from US companies because I can get the same quality (sometimes better) buying directly from Chinese factories. The prices are better and they offer 6 month warranties on just about anything (and I have tested these warranties).

    • I sure wouldn't be wanting to hang onto Amazon or Ebay stock right now (assuming either have stock, sorry I don't keep track of things like that).

      If I were you, I wouldn't even take my own advice on stocks.

    • Re: (Score:2)

      by sodul ( 833177 )

      If i can buy a part directly from the manufacturer in China for $3.99, I'm not going to pay $11.99 for Amazon to deliver it to me or even $5.99 for an Ebay reseller.

      The problem is, last time I wanted to get something through Alibaba, I had to order at least 10 times the amount I needed, or get a sample for 10 times the shipping costs through FedEx (or similar). I checked the shipping costs from china myself and they were correct. This made the transaction not worth it so I just waited 2-3 months for someone to buy in bulk to dilute the shipping cost and to resell in small quantities on eBay ... the middle man saved me money.
      That was 2-3 years ago, but nowadays I see sm

      • alibaba.com targets the wholesale market; but there is also aliexpress.com which is for the consumer market and you can buy items individually there.

    • I know I will never buy from Alibaba, and I buy from Amazon everyday.
      Just like I go to high-end stores and supermarkets but not to low-cost factory outlets.

    • Re: (Score:2, Insightful)

      by gaiageek ( 1070870 )

      The reason Alibaba will take over from Amazon and Ebay is simple.

      Have you ever ordered from China before? Because your comments overlook a few things.

      1. Shipping. I have never received anything that's been shipped from China in less 3 weeks, and it's usually been closer to 5 or more. (Coincidentally, just before finishing my final comments below, a small package of keychain LED lights arrived which I ordered 4 weeks and 6 days ago.) Sometimes that's ok if it's a cheap gadget I don't need in a timely fashion (keychain LED lights being a perfect example), but for most th

      • I just remembered a 4th point:

        4. Returns. Let's say you aren't satisfied with something purchased from a Chinese seller. They say they're happy to refund your money if you return it. Do you know how much it costs to ship a 1-pound package to China? $15 ($16.75 if done from the Post Office). Do you think they're going to reimburse you for that? And that cost is without any kind of tracking, so it wouldn't surprise me to hear that your package never showed up (whether lost or "lost").

    • First, scale. It moves more product than Amazon and Ebay COMBINED, and that's before even entering the US market. The network effect will dominate.

      That doesn't mean a damn thing once a company leaves their home country. Alibaba dominating in China doesn't mean they are assured of any kind of success on the other side of the Pacific. There are innumerable examples of companies that dominate their home markets that struggle in new markets including Walmart, Google, eBay and others. Alibaba might be a great investment and dominate the Chinese market but it isn't remotely certain they will be anywhere near as successful outside of China.

      Second the vast majority of what Amazon and (especially!) Ebay sells is made in factories in China anyway.

      Demonstrably no

    • Honestly not so much. I just checked a few items I've had my eye on and Amazon or ebay are both cheaper, and probably better quality.

  • IPO prices (Score:3)

    by the eric conspiracy ( 20178 ) on Friday September 19, 2014 @11:14PM (#47951801)

    > Some critics do say that Alibaba's share price will plummet from its current value of $93.60 in the same way that Facebook's and Twitter's plummeted

    The vast majority of IPOs are lower in price 6 months after the issue date. Usually what happens is that company owners have some restrictions on when they can start selling stock - and those are typically 6 months or so. So on the day of initial sale supply is very constrained. Later a lot more shares flood onto the market.

    For example Facebook went from $38 to $19.

    Purchasing IPOs on day of issuance is a sucker move.

    • And yet they are up to $77 (and climbing) now. I'd hardly call them suckers.

    • Also, six months from communist China could be in turmoil over one thing or another. Share prices scurry to the ground!

    • IPO prices (Score:1)

      by Anonymous Coward

      Alibaba actually has revenue, as opposed to Facebook and Twitter's future-revenue based on the number of people visit their website.

  • Why is Alibaba selling IPO in USA? (Score:5, Interesting)

    by Spy Handler ( 822350 ) on Friday September 19, 2014 @11:16PM (#47951809) Homepage Journal

    It's a Chinese company located in China, and most of its business and customers are in China. So why is it doing its IPO on the US stock market?

    Shouldn't NYSE/Nazdaq disallow this? SEC and FTC have no jurisdiction in China or anywhere else outside the USA. If a chinese company listed on NYSE did fraudulent accounting or whatever, SEC can't do jack shit about it.

    The whole thing seems like a clever scheme by Chinese companies and Goldman Sachs to sucker money out of U.S. investors.

    • Re:Why is Alibaba selling IPO in USA? (Score:5, Insightful)

      by mister_playboy ( 1474163 ) on Friday September 19, 2014 @11:36PM (#47951877)

      Alibaba is doing the IPO in the US because US exchanges will go along with the "sell majority of stock but retain complete control over operations" setup the Alibaba owners wanted to use.

    • If a chinese company listed on NYSE did fraudulent accounting or whatever, SEC can't do jack shit about it.

      Realistically, by the time the SEC gets around to doing anything, the money is already long gone (Enron, Madoff, etc).

    • My understanding is they had to do a bit of exchange shopping before they found one to do the IPO. IMHO, it's a Chinese company with Chinese books, AKA probably cooked. The ownership is pretty muddled.

      IMHO, if you read the ra ra stuff (sell direct from China, network effect, economy of scale, etc) it looks like a great stock. But if you're a nervous nellie like me the Chinese accounting and muddled ownership make me think of Monty Python's RUN AWAY RUN AWAY.

      Cramer loves BABA, interesting to see whe
      • even pro investors specialising in this area avoid the main Chinese exchange and prefer HK based shares.

    • China has a closed capital account, putting all kinds of limitations on businesses. All those yuan they get from listing in China is hard to exchange to other currencies, which they want for future expansion. The USD they collect now, they can however quite easily channel back into China as "foreign investment".

      Also note that in fact Alibaba first looked at the Hong Kong stock market for listing. Again outside of China, but a lot closer to home. They were rejected by the Hong Kong board, as they could not f

    • Re:Why is Alibaba selling IPO in USA? (Score:5, Interesting)

      by pitchpipe ( 708843 ) on Saturday September 20, 2014 @12:33AM (#47952019)

      The whole thing seems like a clever scheme by Chinese companies and Goldman Sachs to sucker money out of U.S. investors.

      It is. What do you really own with Alibaba? The websites? No.

      What's really for sale: [cnn.com] When investors buy Alibaba, they are actually purchasing shares in a Cayman Islands entity called Alibaba Group Holding Limited.

      But that company -- surprise! -- doesn't actually own Alibaba. Instead, Ma and another co-founder, Simon Xie, own most of Alibaba's biggest businesses according to Chinese law. Ma and Xie are then under contract to turn profits over to the Cayman entity.

      The arrangement is called a variable interest entity (VIE), and is necessary to get around China's strict foreign investment rules. But investors should be aware of the structure -- especially since Chinese courts have not clarified the legality of the arrangement.

      Voting rights and control in the company? No. [economist.com]

      So what the fuck do you actually own? Hope and promises. My ex-wife gave me those.

      P.S. Even the Hong Kong stock exchange spurned Alibaba. [bloomberg.com]

      • Re: (Score:2)

        by DarkOx ( 621550 )

        I know I can't believe this facts are being so under reported myself. The Alibaba management or the Chinese government (which probably could no matter what) is basically able to do just about anything they want and completely screw the investors who will be left with essentially no recourse legal or otherwise.

        Its crazy to get into this deal where equity investors have essentially no rights or claim.

        The cynic in me thinks the institutional guys buying up this IPO know this perfectly well and plan to unload

    • Re:Why is Alibaba selling IPO in USA? (Score:5, Interesting)

      by fermion ( 181285 ) on Saturday September 20, 2014 @12:46AM (#47952067) Homepage Journal
      The story is the owners want to maintain control, even if they do not maintain a controlling interest. They set up a shell company in the cayman islands which is nominally linked to the profits of the actual company, and as far as I can tell are in fact selling shares in that shell company. So the company that is being purchased in not in china, and the business model will probably be international.

      As far as why this is allowed, it is a lot of money. The banks and firms who are managing the IPO are US and will make a lot of money. The persons and firms who are allowed to buy or are given the stocks will make a lot of money when they resell the stock, either immediately, or in a few months when principles are allowed to resell stock.

      It seems that the sale is on shaky ground, given that the Chinese government can likely do any number of things to make the shell company worthless. I think what some may be hoping is that the Alibaba can quickly expand out of china and preserve value as a worldwide conglomerate type thing. At a basic level this is further indication that there is a lot of capital out there, and for some reason the people who have it think it is better to risk it on the occasional potential high return scheme than use it to build long term infrastructure. I guess no matter how much money one have, one always is susceptible to a get rich quick scheme,

    • Re: (Score:2)

      by CAIMLAS ( 41445 )

      Yes. This.

      They've also already lost value (about 10% from when they opened). How is that a good deal?

      It's just China trying to sucker punch the economy in the US and leech off more funds.

      How indeed, does the SEC allow this. :(

    • Re: (Score:2)

      by tlhIngan ( 30335 )

      It's a Chinese company located in China, and most of its business and customers are in China. So why is it doing its IPO on the US stock market?

      Shouldn't NYSE/Nazdaq disallow this? SEC and FTC have no jurisdiction in China or anywhere else outside the USA. If a chinese company listed on NYSE did fraudulent accounting or whatever, SEC can't do jack shit about it.

      The whole thing seems like a clever scheme by Chinese companies and Goldman Sachs to sucker money out of U.S. investors.

      Well first off, it should ri

    • Re: (Score:2)

      by Khalid ( 31037 )

      I believe their Holding cie is located in Cayman Islands not China.

  • Not really buying Alibaba (Score:5, Informative)

    by Brennan Pratt ( 3614719 ) on Friday September 19, 2014 @11:24PM (#47951841)
    Shares go to Alibaba Holdings Group Limited in the Cayman Islands. The contracts enabling proxy investment by Americans (otherwise illegal in China) have never been upheld in a Chinese court of law. Not something I would want as a long term investment.
    • I almost see your point, but if economic warfare breaks out between China and the US, the whole economy will be wrecked. Stores won't even have shoes to buy.

  • The less you understand it... (Score:3)

    by Beeftopia ( 1846720 ) on Friday September 19, 2014 @11:27PM (#47951855)

    The less you understand the company, the more attractive it is. I suspect the opacity of its operations are a draw.

    I remember the tech bubble: "Two guys with a server and a dream" could make millions (on paper). If they cashed out quickly enough, they could turn it into currency.

  • IPO wasted nearly $10B (Score:5, Interesting)

    by Citizen of Earth ( 569446 ) on Friday September 19, 2014 @11:48PM (#47951899)

    The IPO also wasted nearly $10B considering that the issue price was $68 and it started trading at $95. I just can't understand the logic behind the IPO mechanism. The purpose of an IPO is to raise as much capital as possible for a company to enable it to grow. However, 41% of the IPO value didn't go to the company; it went to lottery-winning middle men who were given shares for $68 and immediately flipped them to the open market.

    An IPO should operate like a Dutch auction, with company having a trading account loaded with all of the IPO shares and starting sale for at a high valuation like $200 and then ticking down 1% every minute that "too few" shares are sold. This maximizes the haul for the IPO company by not squandering billions of dollars on bank insiders.

    • Re: (Score:1)

      by Anonymous Coward

      I just can't understand the logic behind the IPO mechanism. This IPO [is] squandering billions of dollars on bank insiders.

      Your confusion is reduced if you skip the rest of what you wrote.

      Who determines the IPO price? The underwriters. They just made $10B, which will more than offset the $2B in fines and no admission of wrong doing the next CEO makes in five, ten or fifteen years when the trial is finally settled.

      • Who determines the IPO price? The underwriters.

        My point is that it should be The Market that determines the IPO price(s), not the necessarily incompetent and corrupt Central Planners. You'd think these guys ever heard of a little thing called the Free Market and the regulators would have an obligation to ensure that a Free Market is provided to the public?

  • It's inflation (Score:4, Insightful)

    by QuietLagoon ( 813062 ) on Saturday September 20, 2014 @12:12AM (#47951955)
    The size of the IPO is bantered about in US$. Ten years ago, the IPOs were worth less in the US$ of that time.

    .
    It is the same reason that Hollywood always touts dollar amount of ticket sales and not the number of tickets sold. With the ever increasing ticket prices, ticket sales will always increase, even if the number of ticket sales remains the same. If you take into account inflation [boxofficemojo.com], Gone With The Wind (1939) is the largest grossing movie.

    IPOs are subject to a similar inflationary hype. This is the same Wall Street that crashed the world economy a few years back. They want to make it appear as if everyone is farting sunshine and rainbows so Main Street will start sending money to Wall Street once again.

    Be afraid, be very afraid.

    • If you take into account inflation [boxofficemojo.com], Gone With The Wind (1939) is the largest grossing movie.

      As that's so long time ago, you may even have to take into account the population at large. Selling 1,000 tickets to a population 10,000 in size is much more impressive than slling the same number of tickets in a population 1,000,000 in size. Plus of course the lack of competition by television or more recent developments such as The Pirate Bay.

  • It really seems like pretty much any tech IPO is going to be huge, even though history shows that most of the recent ones (last 20 years) are bad investments. Is Wall Street really just packing so much extra cash that they have nothing better to invest in than a Chinese company with no actual presence in the US? This whole thing just seems crazy to me.

  • People will flock to buy stuff and invest in this company which markets and sells goods manufactured almost exclusively in China and then have the nerve to complain about the US foreign trade deficit. We the stupid, blind and thoughtless Americans, brought it upon ourselves, and continue to do so, all the while blaming it on Obama, Congress or whatever other fool is in office. We get what we deserve I guess...

  • I seldom post but read regularly - great and varied source of mat'l on many different subjects. This series of posts seemed to score lower than most, at least subjectively from my POV and particularly where critical posts were being made and often by foreign nationals. Perhaps I'm just being too touchy-freely or perhaps those who make these assessments have a POV quite different from mine. I certainly will cop to the former at times, but this thread felting jarring in that respect - and for the for the r

  • will be the biggest IPO ever in the US and prove the SEC and the rest of the goverment is a sham.

  • Comment removed based on user account deletion
  • China rather want Amazon and eBay than Alibaba.Because Amazon and eBay sells more goods than Alibaba.
  • I've used aliexpress.com (the consumer site for alibaba). It's incredibly scammy.

    The prices are not that different to those offered by ebay sellers (usually the same). Ebay accepts Paypal, Aliexpress doesn't. Although they have an ill reputed escrow service.

    Aliexpress selers have a lot of things you can't buy on ebay. It's great for buying knockoffs. I used it to be Gameboy and NES clone.

    It's very popular with women, who use it to buy cosmetics at very low prices (probably fake brands).

    • Re: (Score:2)

      by Lehk228 ( 705449 )
      alibaba a nd aliexpress are great when you want something that you normally can't just order online, like an entire cash register, conveyor belt and housing for the above or a vending machine configured to dispense clothing.

  • The entire deal reeks. A holding company in the Caymens associated with a company in a foreign land with profits which may or may not meet accounting standards. The only people dumb enough to take that play would those who cant lose, like banks.

  • "... even than Visa's ($17.9 billion), Facebook's ($16 billion), and General Motors ($15.8 billion)"

    A payment method, a time waster and a 'products that kill you' company.

    Here you can actually buy stuff, and lots of it has free shipping, may it be to Ouagadougou, Timbuktu or Buttfuck, Idaho.

    You know, useful.

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