Technology and Internet stocks are absolutely melting right now and we haven’t even gotten to summer yet. Recent and fairly recent IPO’s like Twitter, LinkedIn, Yelp, Pandora, are just getting crushed. Many of them are down around 50% from their highs. Other more established tech stocks like Google, Amazon, and Netflix aren’t doing much better as they are down 24% to 40% in recent months. Its a brutal time to own growth tech and definitely NOT the best time for another IPO.
Unless you are Alibaba.
Alibaba will have its IPO later this year (possibly just a few short months from now) and by all indications, it looks to be the biggest public offering since Facebook. But unlike Facebook and the other social media stocks, Alibaba is an established company that absolutely dominates in China and will most likely do very well going forward as they try to expand worldwide. They are a proven commodity and because of that, their stock IPO should be looked at differently than those others.
Alibaba is not well known in the United States but that will start to change as the IPO process is already garnering a tremendous amount of media coverage. They just filed papers with the SEC and while they have yet to announce which US exchange they will trade on or what their ticker symbol they will trade under, potential investors are eagerly trying to figure out how to buy Alibaba stock before it goes public.
Often said to be part Amazon, part Ebay, and part Paypal, Alibaba is a force in e-commerce that actually does make a lot of money (unlike Amazon). That means they have the infrastructure and know how to come storming into America and rapidly become a strong competitor to all online retailers. Amazon though, could feel the most pressure as they have the most to lose at this point in time. Amazon has fought hard to sell everything to everyone and be the first place people go when they buy online. Now with Alibaba coming in the market, Amazon will feel real pressure like never before as people test out the new alternative.
The Alibaba IPO should bring to market a solid company that won’t be as prone to the rapid run ups and sell offs that other Internet stock IPOs have seen this year. They have a proven track record and they should make even more money over time. There aren’t the questions about the viability of the product and how to monetize it like there has been with Twitter, Facebook, and others. For that reason, investors will be able to put their money into a stock that will give them good growth for years to come and perhaps less stress than the current crop of recent technology IPOs.