First Take: New clues to Alibaba’s value



SAN FRANCISCO — Alibaba Group Holding has updated its IPO registration document, with financial results for the quarter ended in June showing sales at the Chinese Internet giant are still surging and its profit margins are expanding.

Given the valuations that investors have placed on other big tech IPOs, including Facebook, LinkedIn and Twitter, the results could support a valuation near or above $150 billion for Alibaba’s offering.

The company’s amended F-1 filing with the Securities and Exchange Commission shows that revenue for the period rose 45% to $2.15 billion.

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Alibaba’s operating income rose 26% from a year earlier — accelerating from 22% growth in the March quarter — to $1.1 billion.

That earned it an operating margin of 51% in the most recent period.

Facebook, for its quarter ended in June, had an operating margin of 48%.

Alibaba’s net income rose more than 2½ times to $2 billion, or $5.20 a share, thanks to gains in equity stakes it holds.

Professional fund managers who’ll be buying Alibaba IPO shares in the coming weeks will be looking at the company’s price-to-sales ratio, among other factors, in valuing its shares.

As a benchmark, both LinkedIn and Facebook hit the public markets valued at roughly 12 times the expected sales for the year of their respective IPOs.

Twitter’s price-to-sales ratio at IPO was much higher, at nearly 20.

With Alibaba’s annual revenue run rate now at close to $9 billion, an offering accompanied by Twitter-like euphoria could value the company at $180 billion as it hits the public markets.

If its shares price more like those of Facebook or LinkedIn, Alibaba’s valuation could be $144 billion.

John Shinal has covered tech and financial markets for more than 15 years at Bloomberg, BusinessWeek,The San Francisco Chronicle, Dow Jones MarketWatch, Wall Street Journal Digital Network and others. Follow him on Twitter: @johnshinal.