Yahoo! Inc. (YHOO): What will Drive The Alibaba Group’s Future Growth?

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Yahoo! Inc. (NASDAQ:YHOO)’s biggest investment till date, the Alibaba Group is going to start its roadshow on September 8, ahead of its IPO in the U.S. Some analysts are valuing the company at $200 billion, but that raises the question if the Alibaba Group is already so big, would it be able to provide big returns to its potential investors in the future? Whatever the answer to that might be, Yahoo! Inc. (NASDAQ:YHOO)’s investors will surely love to see a high valuation for the Alibaba Group on its IPO as Yahoo! Inc. (NASDAQ:YHOO) owns over 20% in the Alibaba Group. DCM Co-Founder and General Partner David Chao and Mia Saini discussed today on Bloomberg the future of the Alibaba Group.

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“Most people in Hong Kong know how to use the site, they are active participants in this marketplace, one of the largest in the world that connects buyers and businesses together. What’s interesting though as I have come to the States is that many people have never been on the website, they have never ever heard the name […],” Saini said.

Chao feels that the way the Alibaba Group is growing, its IPO will show that the world order in technology is going to change because the Alibaba Group will be the largest Chinese internet company by market capitalization and world’s largest e-commerce company in terms of sales. Chao believes that even though the Alibaba Group is a large company, it’s still in the early phase in the way that e-commerce is coming up in China, where mobile commerce is still in a nascent stage.

Saini feels that mobile commerce is a very important area for the Alibaba Group as China is seeing new entrants in the country’s middle class, who are purchasing a smartphone for the first time and can use it to make their first e-commerce purchase.

As of June 30, 2014, D.E. Shaw’s firm D.E. Shaw  owns over 16 million shares in Yahoo! Inc. (NASDAQ:YHOO).

Disclosure: None

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