Alibaba Learns from Facebook Inc (FB)’s IPO: Can Yahoo! Inc. (YHOO) Get Benefits?

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Jack Ma, the CEO of Alibaba has priced much awaited IPO of the company in the US at a lower price contrary to the expectations of the investors. Discussing this issue in a program on CNBC, Roger Kay, president at Endpoint Technologies, said that this is a smart move by Alibaba’s CEO as he has learnt from the Facebook Inc (NASDAQ:FB)’s disastrous debut. Alibaba is also paying $15.8 million in legal fees for its IPO ,which is six times that of what Facebook Inc (NASDAQ:FB) paid two years ago.

Alibaba

“Jack Ma is very astute and he noticed that Facebook Inc (NASDAQ:FB) tripped over its initial public offering and doesn’t want to do the same thing, so better to low ball it a bit and have it rise as it goes into the market then have the public investors feel like they have been short changed and they essentially paid too much […],” said Kay.

Answering the question about the lack of organizational control and bad media reports about Alibaba’s transparency, Kay said that many people forget that capitalism in China has not yet nurtured as it has in the US. He said that economy in the West has been working for hundreds of years and Jack Ma will have to straighten up his board of directors to avoid any kind of lawsuits from shareholders in the future.

Out of 320 million shares, 120 million are offered by Alibaba itself and the rest are from other stakeholders like the Japanese conglomerate, Softbank Corp, as well as other insiders. The second-largest shareholder is Yahoo! Inc. (NASDAQ:YHOO), with a stake of 22.6%. Kay said that the contemporary markets are most tilted towards investing in the private sector whereas in the past, companies used to come in the market to operate and generate equipment, plants and hire people. According to reports, Yahoo! Inc. (NASDAQ:YHOO)’s core business is now being valued at  $11 billion by investors amid Alibaba’s IPO. Moreover, Yahoo! Inc. (NASDAQ:YHOO) is expecting a huge growth after the launch of Alibaba in the US.

D.E. Shaw’s firm D.E. Shaw is one of the biggest shareholders of Yahoo! Inc. (NASDAQ:YHOO), having approximately 16 million shares of the company. Philippe Laffont‘s Coatue Capital is one of the biggest shareholders of Facebook Inc (NASDAQ:FB), having over 5.8 million shares of the company so far.

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