Yahoo shares fall after Alibaba IPO filing
The US Internet company saw a 6.6% drop in its shares to US$34.07 at the close of trade as the market digested details in Alibaba's initial public offering documents filed the previous day.
Colin Gillis at BGC Partners said the IPO showed Yahoo's stake at 22.6%, not the 24% which had been previously estimated.
Gillis said that the valuation suggested in the Alibaba filing was US$116bn and added that that's less than investors expected.
"Of course that's a private company mark and not necessarily reflecting what the public will bring, but that's also something that has weighed on Yahoo," said Gillis.
Gillis said the sheer size of Alibaba was taking a toll on the rest of the technology sector.
"Alibaba's IPO is going to suck a lot of oxygen out of the stock market for stocks like Amazon, Google, eBay and even Facebook and things like that as investors swap out of one stock to another," he said.
Market value of US$150bn?
Some investors were expecting Alibaba's market value to be around US$150bn or more.
One of the more optimistic values came from the private company research firm PrivCo, estimating that the fair valuation was about US$195bn for the Chinese firm. But another research firm, Trefis, pegged Alibaba's worth at just US$95bn.
Yahoo Chief Executive Marissa Mayer told a New York technology conference that the US firm would maintain its plan to cut its stake by 40% when the Chinese firm makes its market debut, but declined to comment on valuation.
'Yahoo could be pressured as a result of the IPO because there's no need to own Yahoo as a proxy for Alibaba," Gillis said. "You'll be able to buy Alibaba itself."
Alibaba, often described as a Chinese version of Amazon or eBay, indicates US$1bn will be raised in the public offering, but that amount is expected to be greatly boosted with later amendments.
The IPO is part of efforts by the world's largest online retailer to expand globally.
Analysts say the listing is expected to raise somewhere around US$15bn, which would make it the technology industry's largest IPO since Facebook's in 2012.
Talks between Alibaba and the Hong Kong Stock Exchange broke down last year, in part because the city's listing rules prevented Alibaba Founder Jack Ma and senior management retaining some control over the board of directors.
Alibaba wanted an alternative class share structure to give selected minority shareholders extra control over the board, but the Hong Kong bourse declined to change its rules.
Alibaba operates China's most popular e-shopping platform, Taobao, which has more than 90% of the online market for consumer-to-consumer transactions. Taobao has more than 800m product listings and over 500m users.
Source: AFP via I-Net Bridge
Source: I-Net Bridge
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