I didn’t have time to write during #IPO of #Alibaba, but I had positive feelings about this one due to its dominant market position in China. First quarterly report seem to be quite impressive as expected. Although few questions remain open.
As discussed before IPO I had some doubts about sustainability of the valuation level of this interesting stock. Later browsing through the revenue development I was curious to see what happens after Q1. Now the results are out.
Now valuation is getting closer to what could be expected. Depending of the speed of erosion of revenues I would imagine to be interested in this stock around $16-17. This would naturally be just short term stake for this year.
Around end of Q2 there should be some indications if the new game is getting attention of consumers or not. Farm Hero Saga seem quite similar to Candy Crush Saga, but why not, maybe recycling works here as earlier concept did.
Interesting week ahead. Maybe buyers will find suitable level for this interesting stock during coming week. Now it seem to be closing around $18, which is 2.22% drop from opening day. Total loss so far 19.6%.
Few days ago I was little too rough on estimating “fair” value of King. I gave range of 20-40% over valued in that previous post. First day’s drop was -16% for IPO valuation. Following up closely how second day opens up.
Source: Yahoo Finance
King filed for IPO already last September. It was said to delay IPO due to dependency on profits from one game only. Was that all? What has changed after that?
Next interesting IPO for the market that i observe will be King. While trying to figure out where the valuation should be, we could bench mark it to resent partial private acquisition of an other game producer Supercell.
As you might see, new search box has appeared into right sidebar. This is produced by Finnish startup called AddSearch.
It will be interesting to see how Alibaba’s potential IPO will impact into Yahoo. Yahoo has 23% stake of Alibaba. Value estimates of Alibaba seem now been dropping from $100 billion into area of 70-80 billion. Even with that Yahoo’s stake would be worth 16-18 billion. Continue reading Impact of Alibaba’s IPO to Yahoo?
There is nice story about treasure behind name of this Chinese company.
Impressive is also the company carrying this name: their profit rose from US$1.02 billion to US$1.84 billion. Expected revenue level for 2016 is even more attractive: US$18 billion! The analysts are taking it from there adding nice 25x multiple with 20 per cent discount rate and thus reaching an entity worth US$98 billion today. So it seems as valuable as Facebook was during IPO.
It will be interesting to see what happens. I do not predict any specific fate for this “treasure box”, but rather pointing few things that make me wonder.
Alibaba’s market share: Alibaba is currently dominating huge share of Chinese online market. It seems difficult to maintain current position, if competition is opening up.
Alibaba’s market: Alibaba is focused in China. The growth expectations of that market seem to be slowing down from faster period of growth experienced earlier.
Analysts seem to be little undesided too with the valuation. The latest comment i found has already decreased estimate to $62 billion. Timing is cruicial in IPO as you can see from valuation changes. Intresting to see what happens. Merchandise is excellent, but what it is worth?