The widely anticipated Alibaba IPO got delayed, according to a report in Reuters, as the company looks to push out the drawdown term on an $8 billion loan to Dec. 31, 2014. It’s kind of technical stuff, but the move means there will be no rush for Alibaba to raise any capital. That could be bad news for Yahoo (YHOO), which expects to get a huge payday from the offering.
We still don’t know exactly when the Alibaba IPO will hit the market, nor do we have any idea what exchange it will list on. At first, it seemed that management wasn’t going to offer shares on the Hong Kong exchange because of issues regarding governance. But it now looks like the exchange authorities may be willing to loosen things up. In the meantime, NASDAQ and the NYSE are working hard to snag the listing, as is the London Stock Exchange.
After all, an Alibaba IPO will be one of the largest in history. According to an analyst at RBC Capital Markets, the valuation is a whopping $150 billion — significantly higher than Facebook’s (FB) $100 billion and Twitter’s (TWTR) $30 billion.
The reason for the outsized valuation of the Alibaba IPO is that the company is the dominant ecommerce player in China. One of the company’s top executives claims that it can hit close to $500 billion in revenues within a few years, which would make Alibaba even larger than mega-retailer Walmart (WMT).
But to pull this off — and make for a super Alibaba IPO — the company will need to build out its infrastructure, the same way Amazon (AMZN) has done. The company seems to be moving in that direction already, investing $360 million in the Haier Group, which has a strong distribution and logistics network.
As for Yahoo, it controls a 24% stake in Alibaba, which translates into about $36 billion — right now, YHOO’s market cap is only $40 billion. And with CEO Marissa Mayer’s aggressive acquisition strategy, which has a big focus on pricey mobile startups, — the sooner that YHOO can get money from the Alibaba IPO the better.
So far, there appears to be no rush on the part of Alibaba, which could weigh on YHOO stock until there is more clarity around the Alibaba IPO.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.