Alibaba Files IPO With $1B Placeholder, Discloses Partnership

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NEW YORK (TheStreet) - Alibaba has filed its prospectus for an initial public offering with a $1 billion placeholder, as the Jack Ma-founded company moves towards a listing on either the New York Stock Exchange or the Nasdaq.

Alibaba, which is considered the so-called Amazon , Google and PayPal of China, earned $3.1 billion in profit in the nine months ended on Dec. 31, 2013, and revenue of $5.6 billion.

Earnings at Chinese e-commerce giant Alibaba more than doubled in the fourth quarter to over $1.3 billion as revenue topped $3 billion, Yahoo! , a 24% investor in Alibaba, reported in an April earnings supplement.

Results disclosed by Yahoo! represented Alibaba's fourth quarter earnings and included its Singles Day on November 11, the company's biggest shopping day of the year.

In mid-November, Alibaba said it generated $5.7 billion of sales on this year's singles day, including $877 million in mobile transactions. For Alibaba, strong revenue growth and rising profit margins in 2013 mark a busy twelve months.

Alibaba's Businesses

Alibaba operates Taobao Marketplace, China's largest online retail site, Tmall, a branding platform, and Juhuasuan, a group buying marketplace. When combined, the three divisions generated $248 billion in gross merchandise volumes from 231 million active buyers and 8 million active sellers. Mobile GMV's accounted for 19.7% of Alibaba's total volume, up from 7.4% a year earlier.

The company also operates Alibaba.com, China's largest online wholesale marketplace by revenue, 1688.com, and AliExpress, a global consumer marketplace.

In addition, Alipay, serves as Alibaba's online payment platform. The division generally draws comparison to eBay's PayPal unit. Alibaba also said it offers cloud computing services to third parties and which supports the company's ecosystem.

Alibaba didn't disclose segment results from its different businesses.  


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China Exposure

China commerce accounted for $5.65 billion of Alibaba's revenue, the vast majority of its sales, while international commerce and cloud computing accounted for a further $572 million and $90 million in sales, respectively, in the nine-months ended in Dec. 31, 2013.

Those figures show Alibaba, by way of its various businesses, to be exposed to the fluctuations of the Chinese economy. "Our revenue and net income may be materially and adversely affected by any economic slowdown in China as well as globally," Alibaba said in its risk factors section.

Alibaba's prospectus further noted that China's first quarter GDP growth rate was 7.4%, the slowest since the first quarter of 2009, when the world economy was in the throes of a credit-crunch and recession. "Any continuing or worsening slowdown could significantly reduce domestic commerce in China, including through the Internet generally and within our ecysystem," Alibaba added. 

IPO Speculation

In March, the company confirmed would list its shares in the United States instead of Hong Kong. The move came after a long-running dispute with Hong Kong regulators on Alibaba's partnership structure, which seeks to maintain the company's culture by giving partners the ability to effectively control board room decisions.