This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Bull vs. Bear on the Upcoming Alibaba IPO

Stocks in this article: YHOO AMZN TWTR BIDU YELP

NEW YORK (TheStreet) -- The news Friday that Alibaba will be filing its documents very soon to hold an initial public offering in New York is a big deal.

When that filing happens -- and it could be in a matter of days -- the company will reveal details about itself that many in the investing world have been dying to see for well over two years.

The company always seem to be compared to Amazon (AMZN) and yet it is bound to show that it is much more profitable than Jeff Bezos' company. It will also show that it has its fingers in many more businesses with longer-term growth potential in China.

People will also see a business that's much larger than Facebook (FB) in many ways.

So how should investors value it?

Over the coming weeks after an Alibaba IPO filing, you will likely hear two sides debating the merits of the value of the company in an IPO.

On the bull side, you will hear people make several points about why Alibaba is so big and significant:

Size. Alibaba's got its tentacles into all aspects of Chinese society will its Taobao service for consumer-to-consumer, its Tmall for business-to-consumer and its Alipay for payment systems. Not only are they selling a lot of stuff already but it's likely to dramatically increase in the coming years.

Profitability. American internet companies are accustomed to showing strong revenue numbers when they IPO but not profits. They promise that the profits will come shortly. Sometimes they do, sometimes they don't. But with Alibaba the profits are already here. This is why how people value the deal will be so interesting. Does it deserve the same valuation as Facebook because its revenues are the same? But if it's so much more profitable than Facebook, isn't it worth more?

The continued growth of Chinese consumers. In terms of revenue trajectory, there's no better place to be than a dominant player with the Chinese consumer, ready to ride that wave of increased buying power they will enjoy.

The ability to grow internationally. Many Americans only think about Alibaba as a China play. The reality is it has much broader ambitions, including taking its Web sites around the world. It will look to first sell to Chinese in those countries and then expand from there.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,082.57 +52.36 0.29%
S&P 500 2,090.89 +9.01 0.43%
NASDAQ 4,805.4960 +32.0240 0.67%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs