Alibaba is planning to make $24.3 billion selling its shares to the public, reportedly making the largest IPO in history.
The e-commerce leader, which is dubbed as "a mix of eBay and Amazon," is trying to woo mutual fund managers, hedge fund titans and wealthy individuals to buy a share of the company priced at $60 and $66.
CNN lists several things to take into mind in Alibaba's offer which includes its brand familiarity, prospect for profitability, competition and accompanying risks in buying a share.
First, Alibaba remains to be an 'underdog' and not widely known in the U.S. compared to other online leaders like Facebook and Twitter.
The company has 280 million users yearly and is able to deliver 6.1 billion packages in 12 months.
Second, Alibaba reported in a regulatory filing in August that it triples its profit to almost $2 billion in the second quarter.
Aside from that, the online shopping company claimed that the sales from mobile advertising doubled from the previous quarter.
Another factor to consider is the current competition Alibaba faces. There are several leading online trading companies like JD.com which sells electronics and shows promising potential as its shares went up dramatically since its May IPO. Chinese search engine Baidu also performed well since its 2005 IPO.
There are several risks associated with acquisition of any IPO, including Alibaba.
Firstly, the shareholders may not be given the freedom to express their sentiments on the management of the company as its management remains to be bureaucratic and under the control of Jack Ma, the company's cofounder.
Another risk is the increasing number of counterfeit goods in Alibaba. Piracy has been heard of in China, and future shareholders might want to veer away from the issue.
More so, reports of accounting irregularities about a recently-bought film division have haunted the company.
Meanwhile, buying a share of Alibaba would reportedly deem a great opporunity in China, which has an online population of 600 million users and a increasing number of consumer middle class.
