Alibaba Now Public as It Raises $21 Billion in Biggest Tech IPO

You can own a piece of Alibaba now. The Chinese e-commerce giant, which started trading on the New York Stock Exchange today, raised $21.8 billion, and it’ll likely end the day worth more than either Amazon or eBay. The shares opened at $92.70.

Here are a few things to keep in mind about the largest tech IPO of all time:

• Alibaba raised $21.8 billion with the early offering, and everyone’s wondering what it plans to do with that windfall. The company’s already been investing in, and cutting deals with, a host of young American startups, leading to a wave of speculation about how quickly Alibaba will move to more directly challenge Amazon and eBay. Short answer: If it happens, it’s not going to be right away.
• Alibaba was founded in 1999 by Jack Ma, a former school teacher, who is now the richest man in China. The company started as a lone website with a hodgepodge of wholesale buyers and sellers, and it has since turned into a massive portfolio of shopping sites on which hundreds of billions of dollars are spent annually. When Ma appeared at the D: All Things Digital conference in 2011, he talked about his three rules for business: “Customer number 1, employee number 2, shareholder number 3.” It seems to be working. Alibaba generated $8.46 billion in revenue in its last fiscal year, and while that’s about half the size of eBay and about one-ninth the size of Amazon, it’s growing much faster than both and boasts bigger profits.
• The IPO has huge ramifications for Yahoo, which in 2005 bought a 40 percent stake in Alibaba for $1 billion in a plan hatched by then-CEO Terry Semel* and co-founder Jerry Yang that has turned out to be one of the smartest deals of the last decade. Since then, Yahoo has sold a chunk of its stake back to Alibaba but still owns 22.4 percent. It sold less than half of that in today’s offering, which could be worth as much as $8 billion. Yahoo plans to return at least half of that to shareholders and will hold on to somewhere around a 16 percent stake in Alibaba after the IPO.

The listing was a coup for the New York Stock Exchange, which has stepped up its battle with Nasdaq for tech stocks in recent years, winning most recently with Twitter’s public offering. In an interview with Re/code on Wednesday, President Tom Farley said the Alibaba IPO should continue to boost the NYSE’s cred with the tech community.

“It’s very important Alibaba picked us because it’s a great company and certainly brings a lot of publicity to the exchange and we’re thrilled for that reason,” he said. “But it’s a continuation of a trend; it itself is not an inflection point per se.”

Just a few days ago, the exchange was bustling as a sizable team of Alibaba employees set up shop inside the historic Manhattan building. When a security guard questioned someone about a gaggle of visitors who were lined up at the welcome desk, he was told they were employees of Alibaba.

“That’s the magic word of the week,” he said.

* Semel’s Windsor Media is an investor in Revere Digital, the parent company of Re/code.

This article originally appeared on Recode.net.

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