Then there are the complications coming from the ownership structure. Yahoo! (YHOO) owns 40% of the company, and it has stated that it wants to be a seller of its stock so it can expand its own business and buy back its own stock with the proceeds. Sorry, but if Yahoo wants to sell, why the heck should I be a buyer of Facebook? Why not just go be a buyer of Yahoo? If the Alibaba IPO comes well north of $20 billion, something that's always possible, the rest of Yahoo will come to cheap. However, you can then hear the catcalls already. Will it be cheap? Or is Yahoo undermanaged and worthless? Is it a value trap? Yes, I can hear the catcalls already. More supply from all over the place.
Now, let's deal with the real elephant in the room. This company is predicated on Chinese Web growth and Web sales. Who has faith in China? The country itself seems to be decelerating by the day. Was Singles' Day a one-off, a silly holiday that will go away? Does the Communist Party like this company and the wealth it creates? Do they want that level of consumption? Could they shut it down? Could they create a competitor? Why not? This government, and its oversight of the financial aspects of companies there, has a horrendous track record when it comes to policing capitalism. So many Chinese deals have been busts. Plus, even when they blow out numbers, as Baidu (BIDU) has done, it's a total bust. Why bother with this one other than because of the hype?
Yes, this lucrative high-growth company has all of the earmarks of disaster for the rest of the market. If the Alibaba deal comes at a lower price, it will be regarded as a failure. If it comes at a higher price, it will be overvalued. There is no just right pricing. Then there's the confusion of the whole ownership structure, and the inability of any exchange to allow us to feel confident about the handling of a deal like this. In light of this, every day leading up to the deal will be another day of potential ruination as the selling proceeds apace to get the funds to participate and weight themselves into this deal -- one that's too big for institutions to ignore.
In short, I am dreading this deal like a Chinese plague. You should, too.
There is only one thing that can save this deal: if everyone reviles it as much as I do. That way, you can get something done that won't wreck the rest of the tape. But, given the precarious nature of the segments in which Alibaba plays, and given the recklessness of the bankers that control these things, I figure there have to be multiple debacles ahead.
I am not a fan of "Sell in May and go away." If it didn't rhyme, I don't know if people would even say it. But I could be a fan of "Sell in front of Alibaba and go away."
Yes, that's how concerned I am about this deal and its consequences for the entire stock market. The giant sucking sound of money flowing out of everything else to flock to this deal will drown out anything good that might happen.
Wrong time. Wrong business. Wrong cohort. That's the Alibaba deal in a nutshell: the classic top signal for all to see. Let's hope this oncoming train doesn't jump the rails and plow into the rest of the market. I just don't know how that accident won't happen.
At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long FB and GOOG.
Editor's Note: This article was originally published at 8:16 a.m. EST on Real Money on May 7.
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