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Is Alibaba Finally Readying for an IPO?

Stocks in this article: AMAP BIDU SINA YHOO

NEW YORK (TheStreet) -- For well over a year now, there has been speculation about when Chinese Internet giant Alibaba would finally hold an IPO. This has big implications for Yahoo (YHOO) and the entire Chinese Internet sector. Yahoo holds a 24% stake in Alibaba.

Yahoo shares were at $38.75 at 3:15 p.m. The stock is down 4.24% YTD and down 2.29% for the day.

For months there have been questions about whether Alibaba would choose to hold an IPO in the U.S. or Hong Kong. It seems like Alibaba has been trying to convince the Hong Kong Stock Exchange to agree to their preferred corporate governance structure. Such a model would be no problem for the U.S. exchanges, the NYSE and Nasdaq.

Then there's the case of Tencent (700:Hong Kong), the Chinese media and Internet company which has been on a roll for the past eight months. Their stock -- which trades in Hong Kong -- is now worth more than $150 billion. This allows the company to more aggressively use its stock to buy stakes in other companies or buy them outright.

Alibaba can do the same -- even though it's still private -- and has been doing the same, buying stakes in companies like Sina (SINA) or buying companies outright, like AutoNavi (AMAP).

What's at stake is potentially control of the entire Chinese Internet. Eight months ago, you might have been able to argue that Tencent controlled gaming in China, while Alibaba controlled e-commerce and Baidu (BIDU) controlled search.

With the explosion of WeChat's messaging service however, Tencent has been able to move more aggressively into e-commerce with its own payment system, which rivals Alibaba's Alipay.

That means there's much more urgency within Alibaba to fight back against Tencent's incursion into its space.

All this might mean that Alibaba's management and board are looking at holding an IPO sooner than later.

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