Alibaba's $25 Billion Day

"Tomorrow is going to be a big day for gauging the appetite for quality Chinese equities," I wrote yesterday, waiting on's anxiously anticipated IPO.

So how is that appetite? Voracious, and that's putting it mildly. Hungry investors donning messy bibs chased China's top B2B (business-to-business) website 193% higher on its first trading day. (I'll let you come up with your own "after-dinner mint" joke here.)

The market's feast means that left a lot on the table when it sold a 17% stake in the company for a mere $1.5 billion. The company shouldn't be smarting too badly, though. It has gone from a $9 billion company to a $25 billion company overnight.

With comparable financials to (Nasdaq: BIDU  ) , suddenly China's leading search engine doesn't seem so insanely valued with its $14 billion market cap!

And now for an encore
Stateside investors can't be too happy. isn't even trading on a stateside exchange, and it's already packing a market capitalization that stacks up to some of the seasoned dot-com juggernauts.

Buying into now isn't a ground-floor opportunity. Google (Nasdaq: GOOG  ) is the largest Internet stock on the planet, yet even Big G commanded a smaller market cap of $23 billion when it went public three summers ago.

Don't get me wrong. is an amazing growth company. It's the only online marketplace that matters when it comes to moving goods in and out of China. It's an easy story stock to tell. Even if the next few months are bumpy, I have little doubt that will be one of the great global Internet companies in a few years.

So what's an investor to do? The beauty of the IPO is that just padded its coffers with a ton of dough. With 60% of the proceeds earmarked for acquisitions -- and a hot stock to prime the well for equity-based buyouts -- won't have to just grow organically in the future.

I detailed some of the corporate coattails heading into the IPO yesterday. Now let's sneak a peak at some of the acquisition targets that may fit with Alibaba's plans.

Let's go shopping with
Snapping up smaller rivals isn't mission-critical. already commands the lion's share of the market. Its best move to justify its suddenly chunky market cap is to expand globally. Japan is an obvious target. It's the first non-Chinese market that Baidu expanded to earlier this year.

There isn't a whole lot to speculate about regarding in Japan, though. With the Yahoo! Japan team of Yahoo! (Nasdaq: YHOO  ) and Softbank anchored as significant investors in's parent company, you're looking at the likely shoehorns there.

So what's worth buying out there? Sadly, there aren't too many country-specific titans in B2B that trade publicly. The nearest fit will be C2C (consumer-to-consumer) sites that facilitate the auction exchange of goods between consumers. eBay (Nasdaq: EBAY  ) is too big, but there are a few regional fruits just waiting to be plucked.

Two strong buyout candidates there would be South Korea's Gmarket (Nasdaq: GMKT  ) and South America's MercadoLibre (Nasdaq: MELI  ) . It doesn't hurt that Yahoo! is also an investor in Gmarket, making the regionally attractive market a perfect fit.

However, C2C and B2B aren't just alphabetical kissing cousins.'s parent company also runs Taobao, China's most popular C2C auction site. Things could get incestuously tricky if Alibaba tries to grow C2C wings closer to home.

In the end, is likely to just nibble away at Eastern upstarts that can help it broaden its reach (both within China and abroad). It has the money. It has the girth. It has the connections.

As investors, we can only lament the all-too-quick ascent of It's like a pair of lovestruck elders who finally hook up at their 50-year high school reunion -- one can only wonder how things would have played out if had given us the chance to get something started sooner.

Get ready for more Foolish fare:

Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 539797, ~/Articles/ArticleHandler.aspx, 10/23/2016 9:50:50 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 days ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
BIDU $176.76 Up +1.59 +0.91%
Baidu CAPS Rating: *****
EBAY $29.06 Up +0.04 +0.14%
eBay CAPS Rating: ****
GOOGL $824.06 Up +2.43 +0.30%
Alphabet (A shares… CAPS Rating: *****
YHOO $42.17 Down -0.21 -0.50%
Yahoo CAPS Rating: **