"It's easy to get caught up in the emotion and hype of an IPO of this magnitude, but, there are plenty of risks," says Dennis Hobein, an equity analyst at Briefing.com.Let's zero in on 3 of those risks:
1) Fuzzy corporate structureMany investors are questioning the corporate governance and opaque ownership structure at Alibaba. First off, due to Chinese restrictions on foreigners owning certain assets, Alibaba is structured as a "variable interest entity."
"Basically, the Alibaba stock will buy you a stake in a Cayman Islands-registered entity which is under contract to receive the profit from Alibaba's lucrative Chinese assets but will not actually own them," MarketWatch reports.The structure means that the assets and the company will be controlled by Ma and co-founder Simon Xie. Investors are expected to have little or no say on major decisions.