Alibaba Could Hit A Lofty Valuation Of $1 Trillion, Is The Pedestal Deserved?

Alibaba, a global virtual Business-To-Business (B2B) platform, will have its stocks officially listed on the New York Stock Exchange (NYSE) today. What’s important about the company is that its valuation is expected to be the largest ever.

As per latest estimates, the Chinese e-commerce giant will reportedly price its shares between $66 and $68 each, with industry insiders leaning towards the higher figure. If BABA shares are priced at the higher end of that range, the Alibaba IPO price will reach roughly $21.8 billion on its first day.

However, experts are confident that this is just the beginning, and as the stocks warm up, the total ascension achieved will be much higher. If the pace is maintained, the valuation could go as high as $25 billion, depending on how many shares the underwriters purchase following the IPO.

Alibaba itself, which has chosen the ticker BABA (NYSE:BABA), had initially aimed at a lofty valuation of $155 billion for its IPO, but folks at Bloomberg are optimistic that BABA could reach $200 billion shortly after the IPO.

If that’s sound a little high, Money Morning’s Chief Investment Strategist Keith Fitz-Gerald has his sights set much higher for BABA’s valuation. He thinks Alibaba will be the world’s first $1 trillion company and, interestingly, he just might get it right.

Does Alibaba or BABA deserve a valuation exceeding $1 trillion? Justifying his acumen, Fitz-Gerald said the following.

“Several years ago I made the comment that I thought Apple Inc. had a shot at becoming the world’s first $1 trillion company; now, I think Alibaba is the better bet. The company is moving aggressively to create strategic partnerships that are about Web dominance in its home market. It’s already bigger than Amazon.com Inc. and eBay Inc. combined and is now launching an e-commerce platform in the United States called 11 Main that’s going to have popular categories like fashion, home, and collectible items presorted for Western consumers.”

Alibaba has been growing phenomenally across the globe. The online eCommerce-cum-marketplace has been causing a lot online flutter. Moreover, clearing all the hurdles, the company even managed to set a strong foot in American online retail. With strategic investments that have been timed well, BABA has truly become an online behemoth.

The entire United States spent about $263 billion shopping online, while China spent $298 billion. From a statistical point-of-view, China’s consumer e-commerce market soared more than 60 percent in 2013, and many believe this is just the beginning.

At one point in time, Alibaba was seriously interested in acquiring Yahoo, a company that had a large stake in the company. Though $200 billion might be an achievable valuation, do you think a $1 trillion valuation could be reached any time soon?

[Image Credit | Ju Huanzong/REX]

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