Alibaba

I like to follow the tech companies as a matter of interest; much to my embarrassment, I knew very little about the upcoming float of the Chinese tech company Alibaba Group Holdings on the New York Stock Exchange, so some research was in order. 

  
Looking at what they do, I read the core business activities around an English language portal handling sales transactions between importers and exporters; basically a business-to-business portal linking Chinese manufacturers with overseas buyers. I view with interest eCommerce businesses with little to no revenue, no solid business plans to generate solid revenue streams that tend to generate unrealistic expectations and pricing. 

The secondary business revolves around Taobao, the consumer-to-consumer eCommerce portal that is similar in operation to eBay targeting mainly Chinese consumers with revenue exceeding Amazon.com and eBay combined. This is not a business with shaky earnings going to market seeking shareholder funds to stay afloat, it does appear to have higher price/earnings ratio than all tech companies except Facebook.   

According to the Wall Street Journal, a market capitalisation of $155 billion will place Alibaba slightly behind Amazon.com in terms of size and approximately double the size of eBay. A fairly high projected price/earnings ratio sees of 18 times compared to amazon.com's 2.1 times and eBay's conservative 4.2 times earnings. This appears to be an extremely interesting IPO that will be well worth following.