written by reader Alibaba IPO

By Anonymous Questions, September 6, 2014

I would like to get your take on two items:
Even though I cannot get in on its upcoming IPO, would it be wise to buy into the Alibaba shares as soon as they are available to be purchased? How do you think those shares will do in both the short term and long term after the IPO?
And how do you think Yahoo shares will be affected by this IPO? As part of the IPO, I read that Yahoo will be selling 121 million shares of Alibaba. How will that affect the Yahoo shares if you own them prior to the IPO?
I am a little confused about how all of this will work and how I might be able to profit from this IPO, whether through directly buying Alibaba shares or by owning Yahoo shares.
Thank you for helping me understand how all of this will work.

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fanahela
Member
September 7, 2014 9:09 pm

buy softbank for 33% ownership of BABA

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chimellie
chimellie
September 9, 2014 12:17 pm

Kweb is a China ETF that owns BABA too

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Travis Johnson, Stock Gumshoe
September 10, 2014 2:09 pm

I would be surprised if Alibaba rockets dramatically higher after the initial IPO pop that will probably happen on the first day, it’s a huge company and it’s oversubscribed because people are dying to get shares and they’ll probably price it awfully high. If I could get allocated some shares in the IPO I might consider it to sell them later, but otherwise I don’t know the company well enough to suggest a “buy at any price” on the IPO day. I haven’t looked at their initial filings and road show stuff yet.

Yahoo and Softbank are the big publicly traded companies that own substantial chunks of Alibaba — but both have challenging other businesses (Sprint for Softbank, core web portal for Yahoo) that will have a lot of investors losing interest once Alibaba goes public… many people are buying both those stocks for Alibaba exposure, and are less likely to hold them once they can get Alibaba exposure directly.

I think Softbank has been planning on holding their shares, Yahoo is selling at least some — don’t know what they’ll do with the money.

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fanahela
Member
September 17, 2014 1:14 pm

Softbank has 90B in debt, that mitigates some direct impact in EV from Alibaba price appreciation, i have seen $1 alibaba price movement = $0.22 Softbank above $66 ipo price share. SoftB could very much “lag” as Alibaba price stabilizes above $70. Will the market settle for an Alibaba earnings multiplier, A price to sales multiplier, a mix of the two? i dont know.
Still by holding their shares should the “avoided” capital gains tax of 38% be factored back in? this affects valuation. They are not in a need to sell any shares and even without Alibaba they can meet this 90B. Japanesse corporate taxes are expected to start comming down in the next few years.
The new treasure chest will be put to use with the new vice chairman comming from the Google’ chief business officer post. Finally, they should have another 5B from their Alipay stake. Billionaire Loeb placed $1Billion bet in 2013 on this and ran it from the $20’s to the $40’s, he should be the one to tag for “selling pressure”.

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fanahela
Member
September 17, 2014 1:13 pm

Softbank has 90B in debt, that mitigates some direct impact in EV from Alibaba price appreciation, i have seen $1 alibaba price movement = $0.22 Softbank above $66 ipo price share. SoftB could very much “lag” as Alibaba price stabilizes above $70. Will the market settle for an Alibaba earnings multiplier, A price to sales multiplier, a mix of the two? i dont know.
Still by holding their shares should the “avoided” capital gains tax of 38% be factored back in? this affects valuation. They are not in a need to sell any shares and even without Alibaba they can meet this 90B. Japanesse corporate taxes are expected to start comming down in the next few years.
The new treasure chest will be put to use with the new vice chairman comming from the Google’ chief business officer post. Finally, they should have another 5B from their Alipay stake. Billionaire Loeb placed $1Billion bet in 2013 on this and ran it from the $20’s to the $40’s, he should be the one to tag for “selling pressure”.

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