Alibaba (NYSE: BABA), Apple Inc. (NASDAQ: AAPL) – Alibaba Completes 7 Years of U.S. IPO: A Look at the Troubled Course and Future of the Tech Giant


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On Sunday, Alibaba Group Holding Ltd (NYSE: BABA) completes seven years of listing on the New York Stock Exchange. On September 19, 2014, the company’s shares closed at $ 93.89 when they debuted, up 38% from the IPO price – the Jack MaThe founded Chinese conglomerate has come a long way since then.

From humble beginnings: Ma, a former English teacher, founded Alibaba 22 years ago on June 28, 1999.

In a 2006 maintenance along with CNN, Ma revealed why he chose the Alibaba name. “One day I was in San Francisco at a cafe and I thought Alibaba was a good name. And then a waitress came in, and I said you know Alibaba? And she said yes. I said what do you know about Alibaba, and she said “open sesame”. And I said yes, that’s the name!

See also: How to buy shares of Alibaba (BABA)

Ma told CNN that the company also registered AliMama’s name “in case someone wants to marry us!”

But before there was an Alibaba, there was China Pages, a company Ma told CNN was probably the first internet company in China. The mission of China Pages was to make Chinese companies known to the world, and it was started by Ma with a loan of $ 2,000 from her brother-in-law.

See also: Jack Ma’s business philosophy

Alibaba’s 18 founders raised $ 60,000 to start the business in 1999, according to Ma. By the time Alibaba was listed on the NYSE, in one of the world’s largest IPOs, the company had acquired a market value of $ 231 billion. This offer raised $ 25 billion.

Ma stepped down as CEO of Alibaba in 2013 and currently the company is headed by Daniel Zhang. In 2018, Zhang was chosen to succeed Ma as Executive Chairman of the Alibaba Group.

In November 2019, the company listed its shares in Hong Kong amid growing tensions between the United States and China over trade and other issues.

A booming Behemoth: Today, Alibaba is worth $ 424.9 billion in terms of market capitalization. It is the second largest company in China behind the Shenzhen-based company Tencent Holdings Limited (OTC: TCEHY) – a tech and internet giant.

According to the current Forbes Global 2000 list of the world’s largest state-owned enterprises, Alibaba Group is ranked No.1. 23 place, in front of names such as Goldman Sachs Group (NYSE: GS), Facebook Inc (NASDAQ: FB), and Sony Corporation (NYSE: SNE).

Handyman: Alibaba has a lot of fingers in a lot of pies. The company’s products and services cover areas occupied by companies such as PayPal Holdings Inc (NASDAQ: PYPL), Amazon.com, Inc (NASDAQ: AMZN), Alphabet Inc (NASDAQ: AAPL), Dropbox Inc (NASDAQ: DBX), Uber Technologies Inc (NYSE: UBER), Spotify Technology Inc (NYSE: SPOT) and more.
Some such offerings include Alipay, Taobao, Tmall, Lazada, Weibo and Alibaba cloud.

Cloud business has been a key area for Alibaba, with revenue reaching $ 2.49 billion in the June quarter and accounting for 8% of the company’s total.

Despite this, the cloud branch saw its year-over-year growth start to moderate after TIC Tac parent ByteDance stopped using the company’s overseas cloud service for its international business.

By comparison, Amazon’s Web Services arm had $ 14.81 billion in revenue, according to the company’s second-quarter figures. Alphabet Inc’s cloud business generated $ 4.63 billion in revenue.

Microsoft’s Azure cloud revenue grew 51% year-over-year.

Hammered and sickle: Chinese president Xi Jinping was reportedly personally involved in the decision to halt the initial public offering of the Alibaba-backed Ant Group in November last year.

The crackdown on the IPO came after Ma gave a speech in October ahead of the fintech IPO, criticizing Chinese regulators for their approach to technology development.

See also: Why China slashed Jack Ma’s IPO hopes, experts say

Ant and Alibaba have since been caught in the fire of regulation that has also enveloped other tech giants such as Tencent.

Recently, the Chinese Ministry of Industry and Information Technology ordered these companies to stop blocking links on their respective websites.

The Financial Times reported this month that China wants to dismantle Alipay, the payments app owned by Ant, and move the company’s lending business to a separate app.

The regulatory crackdown has weakened sentiment around the company, with shares falling 33.49% year-to-date in Hong Kong and 32.86% in New York.

Since Ma’s speech, he has remained off public radars, making a solitary appearance in January when he met 100 rural teachers via video conference. Even then, no information was provided on his fate.

See also: Why the reappearance of Jack Ma is not enough to calm Alibaba investors

A possible turnaround? Despite the company’s recent troubles, analysts have repeatedly given it a positive rating. Of the fourteen analysts who provided ratings for Alibaba in the last quarter, 3 offered bullish comments and three others declared somewhat bullish positions. Only 1 analyst was bearish, according to data from Benzinga.

The average price target proposed by analysts was $ 271.29 with a high of $ 306 and a low of $ 192.

“We believe that Alibaba is navigating well in the current regulatory environment and is poised to expand into several business areas such as ridesharing and food delivery, where increased regulation can benefit everyone. industry because some competition will be eliminated, “said by Needham Vincent Yu.

See Also: Alibaba Analyst Says Regulatory Environment ‘Tough’, But Worst Is Over

“At this point, we do not believe that there is a material risk to Alibaba businesses based on recent regulatory actions,” said Aaron Kessler of Raymond James publish the company’s results in August.

Eastern Amazon: Alibaba is often compared to Amazon, as both companies operate in similar areas such as e-commerce and cloud web services.

Despite the increased regulatory oversight the company faces, it is making progress for its future. Recently, he invested $ 300 million in the Shenzhen-based company DeepRoute.ai, a provider of autonomous driving solutions.

DeepRoute plans to increase its robotaxi fleet to over 150 by the end of this year.

Alibaba also agreed to contribute $ 15.5 billion over five years to President Xi’s “common prosperity” vision, according to reports.

Alibaba’s contribution will go to a program to reduce income inequality in the country.

The company also had to pay fines amounting to $ 2.75 billion for abusing its dominant position in the market.

So it’s conceivable that Alibaba might be able to put an end to its regulatory woes at some point and truly become the Eastern Amazon.

Return: Alibaba stock returned 135.3% at Friday’s close at $ 160.05 from the IPO price of $ 68. Since the start of the year, the title is down 31.2%.

Read more: Fired Alibaba Director Charged with Rape Amid Growing Concerns Over Women’s Safety at Company: Report

Photo: Courtesy of Paul Kagame via Flickr

© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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