Alibaba.com Case Solution
November 6, 2007, Alibaba.com debuted on the Hong Kong Stock Exchange, raising U.S. $ 1.5 billion to become the largest Internet presence in the world with Google’s initial public offering in 2004. Frenzied buying shares pushed prices up by 193% on the first day of trading, making it the fourth-largest gain on the first day of the Hong Kong Stock Exchange for three years. Closing price of the US $ 5,09 per share Alibaba.com valued in the U.S., about $ 25.6 billion and made it the fifth largest of the world’s Internet companies and the largest in Asia outside Japan. It also made the company one of the most expensive stocks in Hong Kong, is trading at 306 times the company projected earnings in 2007. In contrast to the world-renowned brands such as Yahoo and Softbank in Japan as the major shareholders of Alibaba.com, traded only 60 times their earnings forecast. Shareholders were therefore displaying extreme optimism towards Alibaba.com ‘earning prospects, paying a significant premium to own shares of the company. As observers and venture capitalists noted, China has become a center of technology and innovation for the main pole. Many successful dot com strategy in the West have been copied and refined by the Chinese technology gurus who have honed their technical and entrepreneurial skills in the West. These “sea turtles” hit the international giants like Google and eBay in the rapidly growing Chinese market, and have their sights set on world domination. Armed with the proceeds from a record IPO, Alibaba.com is ready to stay ahead in a competitive online B2B market in China. What strategies the company can pursue and what pitfalls to avoid it? “Hide
by Ricky Lai, Ali Farhoomand Source: University of Hong Kong, 19 pages. Publication Date: June 26, 2008. Prod. #: HKU776-PDF-ENG
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