Yahoo! Inc. (NASDAQ:YHOO)’s Alibaba begins trading today, September 19, at the New York Stock Exchange (NYSE). The China-based company made an entry with its initial public offering (IPO) priced at $68 a share, raising the company’s valuation to a remarkable $167.6 billion.
With that value Yahoo! Inc. (NASDAQ:YHOO)’s Alibaba overtakes Amazon.com, Inc. (NASDAQ:AMZN) to become the world’s highest valued online retailer, a position the U.S. company had held for many years. Amazon.com, Inc. (NASDAQ:AMZN) stock closed at $325 yesterday, putting the company’s value to $150.2 billion, about $15 billion shy of Alibaba.
The question that runs on many investors’ minds is what Amazon.com, Inc. (NASDAQ:AMZN) will do to regain its position, or simply keep its market share intact. The biggest fear, however, is that Yahoo! Inc. (NASDAQ:YHOO)’s Alibaba is growing at a fast pace and could start chopping off Amazon.com, Inc’s market share.
“Alibaba’s annual growth rate of more than 30 percent shows that the gap between the Chinese companies, Alibaba and Tencent, and U.S. companies is getting ever closer,”
said Qing Wang, professor from Warwick Business School.
Growth rate aside, Yahoo! Inc. (NASDAQ:YHOO)’s Alibaba now has the money to carry out aggressive marketing and to go into acquisitions that would make it strong even in the U.S. where Amazon.com, Inc. (NASDAQ:AMZN) is the king.
“This means that there’s a new kid on the block that can give Amazon a run for its money,”
said Kirthi Kalyanam, director of the Retail Management Institute at Santa Clara University.
Yahoo! Inc. (NASDAQ:YHOO)’s Alibaba has a tight hold on China and thus will be working to expand its dominance to Europe, America, and other continents in a bid to continue perching at the top and to silence other retainers like Amazon and eBay that might re-strategize to give the company a run for its money.
Amazon.com, Inc. (NASDAQ:AMZN), having a strong hold on most U.S. online shoppers, has been focusing on China, making huge investments to expand its base. It’s believed that such a move would make Yahoo! Inc. (NASDAQ:YHOO)’s Alibaba want to also switch focus to China, which is its lifeline, so as to distract it from exploring other markets.
This article has beenwritten by Victor Ochieng.