Alibaba's Ipo

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Cover Page Largest IPO in the U.S- Alibaba Hou Wang EDUTL 5902 November 8, 2014 Executive Summary Another history is about to be changed in Corporate America. Alibaba claims to raise $25 billion from its Initial Public Offering, which exceeds the $22 billion by ICBC in 2006, and $22.1 billion by Agricultural Bank of China in 2010. This Chinese e-commerce company, which has only fifteen years’ history, makes the headline every day and creates a lot of discussions. The major business of Alibaba is to provide consumers, suppliers, and manufacturers with a network to conduct trading between each other. Alibaba holds no inventory, but controls 80% share of Chinese e-commerce market. For such a young but fast-growing company, many investors consider this IPO a huge opportunity, but others are still afraid of the potential risks. This case conducts analysis on Alibaba’s financial positions before the IPO, and on the impacts IPO will probably bring to Alibaba financially. In the meantime, this case presents two most serious risks regarding investing in Alibaba’s stock. Although Alibaba has a healthy financial situation, and the large cash inflow from IPO will provide the company with more opportunities to expand its business, it is still very risky to make the investment because of Alibaba’s corporate’s structure and Chinese government interference. Introduction Alibaba, a Chinese e-commerce company which is leading the online and mobile marketplaces in retail and wholesale trade, announced the date of its IPO in New York Stock Exchange. This makes the largest IPO in corporate America’s history. Alibaba is a company founded in 1999 by Jack Ma, a former English teacher in Hangzhou, China. When such a young foreign company with only fifteen years announced the IPO, along with a fairly high P/E, the whole U.S is wondering what Alibaba

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