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Alibaba Raises $21.8B in Initial Public Offering

nytimes.com

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Re: Alibaba Raises $21.8B in Initial Public Offering

#31

Post by skuhn »

richard_cubano wrote: post #25
skuhn wrote: post #5

Alibaba going for a higher selling price just makes the continued undervaluing of Yahoo itself increasingly hilarious. At some point, I would think someone will want to buy them for all of this free money they have sitting around. YHOO market cap : 42.3bn + liabilities : 3.7bn = 46bn (to own outright) Meanwhile: Cash on hand = 1.1bn + Other assets = 15.3bn + Cash from Alibaba sale = 8.3bn + Value of remaining Alibaba…

This has been covered ad nauseum elsewhere in the financial press, but you're assuming Yahoo pays zero corporate taxes on its sale of Alibaba shares. That's not how the world works. You need to deduct something like 40% from the value of the "Cash from Alibaba sale" and "Value of remaining Alibaba stock" and probably also "Value of Yahoo Japan stock". My bet is if you do that, you'll come up with a number that makes…

Zero chance any real company will pay 40% in taxes on stock sales. They have their ways.

http://online.barrons.com/news/articles/SB521330210524938232...

Re: Alibaba Raises $21.8B in Initial Public Offering

#32

Post by harryh »

imaginenore wrote: post #8
skuhn wrote: post #5

Alibaba going for a higher selling price just makes the continued undervaluing of Yahoo itself increasingly hilarious. At some point, I would think someone will want to buy them for all of this free money they have sitting around. YHOO market cap : 42.3bn + liabilities : 3.7bn = 46bn (to own outright) Meanwhile: Cash on hand = 1.1bn + Other assets = 15.3bn + Cash from Alibaba sale = 8.3bn + Value of remaining Alibaba…

Stock is not cash. You can't sell it at the current value price. You can't even sell 0.1% of it without driving the price to zero. The liquidity is just not that large.

Alibaba sold a hell of a lot more than 0.1% of itself today. About 125 times that number. And the price wasn't driven to zero. There's a lot more depth in US equities markets than you think.

Re: Alibaba Raises $21.8B in Initial Public Offering

#33

Post by apercu »

skuhn wrote: post #29
curun1r wrote: post #17

Earlier quoted context omitted.

I think you've got a mistake with how you've figured in liabilities. They should be subtracted from assets, not market cap. So, using your numbers, the difference is closer to $10b, not $17b.

You're right, I adjusted the numbers a bit. That leaves $9.7bn of free money laying around, if you can get at it. (minus taxes and discounts on the value, etc.)

Corporations don't pay tax. Sheesh. ;)

Re: Alibaba Raises $21.8B in Initial Public Offering

#34

Post by ww520 »

skuhn wrote: post #5

Alibaba going for a higher selling price just makes the continued undervaluing of Yahoo itself increasingly hilarious. At some point, I would think someone will want to buy them for all of this free money they have sitting around. YHOO market cap : 42.3bn + liabilities : 3.7bn = 46bn (to own outright) Meanwhile: Cash on hand = 1.1bn + Other assets = 15.3bn + Cash from Alibaba sale = 8.3bn + Value of remaining Alibaba…

I believe Yahoo the company is still strong but the stock has probably topped out currently. Most of the good news have already factored into the price. I sold all my shares couple days ago, on the basis of selling ahead of a definite news event. It had been a good run-up since got it on the teen's.

Re: Alibaba Raises $21.8B in Initial Public Offering

#35

Post by imaginenore »

harryh wrote: post #32
imaginenore wrote: post #8

Earlier quoted context omitted.

Stock is not cash. You can't sell it at the current value price. You can't even sell 0.1% of it without driving the price to zero. The liquidity is just not that large.

Alibaba sold a hell of a lot more than 0.1% of itself today. About 125 times that number. And the price wasn't driven to zero. There's a lot more depth in US equities markets than you think.

IPO is a special event. You can't compare it to a regular stock state.

Re: Alibaba Raises $21.8B in Initial Public Offering

#36

Post by imaginenore »

skuhn wrote: post #10
imaginenore wrote: post #8

Earlier quoted context omitted.

Stock is not cash. You can't sell it at the current value price. You can't even sell 0.1% of it without driving the price to zero. The liquidity is just not that large.

Consider that if I have a bunch of gold bars sitting in a vault somewhere, I don't have to sell them to make money off of them. I can borrow money against their perceived value, currently practically for free. This becomes particularly interesting if I can buy $100 of gold bars for $50. Even if I can't sell them, I can use them to my advantage.

Where can you possibly borrow $22 billion with stock as the collateral?

Re: Alibaba Raises $21.8B in Initial Public Offering

#37

Post by arfliw »

imaginenore wrote: post #35
harryh wrote: post #32

Earlier quoted context omitted.

Alibaba sold a hell of a lot more than 0.1% of itself today. About 125 times that number. And the price wasn't driven to zero. There's a lot more depth in US equities markets than you think.

IPO is a special event. You can't compare it to a regular stock state.

You are technically correct that you can't just login to your broker one day and dump 5% onto the market - but there are ways to sell that amount of stock without crashing the price. A Secondary Offering is one way. It's basically doing an IPO over again but for an already public company. You can also sell directly to hedge funds/mutual funds etc. They have the opposite problem, wanting to acquire a large stake but being unable to because submitting an order for 0.1% would send the price to infinity.

Re: Alibaba Raises $21.8B in Initial Public Offering

#38

Post by foobarqux »

rthomas6 wrote: post #27
baddox wrote: post #19

Earlier quoted context omitted.

Why would that follow?

Because if all shares of the company is valued at X, and the tangible assets of the company are valued at Y, and X < Y, then isn't Yahoo's stock objectively undervalued? I'm not some sophisticated investor, I just buy index funds, but isn't this kind of objective valuation of companies the basis of value investing a-la Warren Buffet?

No, the discount is due to the fact that the market believes there is a risk that Mayer will misuse the money. More generally, no, you are not smarter than the market.

Re: Alibaba Raises $21.8B in Initial Public Offering

#39

Post by ricardonunez »

skuhn wrote: post #29
curun1r wrote: post #17

Earlier quoted context omitted.

I think you've got a mistake with how you've figured in liabilities. They should be subtracted from assets, not market cap. So, using your numbers, the difference is closer to $10b, not $17b.

You're right, I adjusted the numbers a bit. That leaves $9.7bn of free money laying around, if you can get at it. (minus taxes and discounts on the value, etc.)

You also forgot to include the money you have to pay for the lawsuits you will get for doing it. /j

Re: Alibaba Raises $21.8B in Initial Public Offering

#40

Post by theworst »

imaginenore wrote: post #36
skuhn wrote: post #10

Earlier quoted context omitted.

Consider that if I have a bunch of gold bars sitting in a vault somewhere, I don't have to sell them to make money off of them. I can borrow money against their perceived value, currently practically for free. This becomes particularly interesting if I can buy $100 of gold bars for $50. Even if I can't sell them, I can use them to my advantage.

Where can you possibly borrow $22 billion with stock as the collateral?

Acquisitions with much of the purchase being done in stock. My understanding is that this is very common.
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