Summer Blockbuster: Alibaba IPO Heats Up

Expected to raise more than $20 billion.
6:35 | 07/11/14

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Transcript for Summer Blockbuster: Alibaba IPO Heats Up
Okay. It is Friday July 11 and air business parks -- open -- big number is a cool twenty billion dollars. Keep in mind this is on the low end of a prediction for how much money the Chinese e-commerce site Alibaba. Is expected to raise when it goes public -- the launch which could begin by the end of the month. I'm Dan Butler -- New York's here with the details were it would finance Rick TGI FTUs that are -- So there is a connection between Yahoo! and Alibaba -- -- a -- Sure Yahoo! as about a 23% stake in Alibaba so it stands to benefit from -- -- focus on Al -- fourths of the Wall Street Journal. Essentially helped -- some speculation that this IPO timing could be happening at any moment -- imminently anyway. It didn't talk a little bit about Alibaba what it is what it does -- steps that the IPO -- about is basically be. Amazon of China and the reason that investors are so excited about it. Is the growth prospects in China are still huge. The average wage in China is going up by something like 13%. Per year. The average wage United States by contrast is going up by 2% or even less per year. Plus. China's middle class is just getting started having there may -- where the United States was in 1950 or 1955. So it's a change it seems to investors like a chance to get in on the early stages of China's boom. And where which might may replicate the sort of boom we saw in the United States from 1950 in 1980 years so that's why it's such an exciting opportunity. You know a lot of people armchair investors included on this have always trying to figure out how you can get involved of the Chinese economy. Audio if if if in fact you know you've only got you know a small amount of money that you can possibly in -- -- that. -- -- how the road show how they're gonna roll out how does that differ anyway because it is it because it is a foreign company as opposed to won here in the United States. No it's going to be exactly like like Twitter FaceBook when they went public. Road shows of Brett fairly standard practice you put together presentation. You spend a couple of weeks literally traveling around to big investors. The ones who want who are likely to put up the money in the first place institutional investors that is. And you try to generate excitement about -- about your company about your stocking your prospects for the next several years which is where the stock price ultimately comes from. You know that IPOs are very tricky for ordinary retail investors -- To get in -- because. We don't get we don't get to buy the shares ahead of head of the float when they actually go on sale. We only get to buy them once or in -- market -- that -- at that point they may be inflated in price because the goal of the the early people who buy in of course is to get the most for their money so they -- -- want to see a very high. A very high initial sales price and we with FaceBook for instance I was a very hyped. IPO they in this the stock price plunged immediately after the IPO. So anybody who bought it the first day on the public markets lost money for -- and if you held onto -- you've made money but. He didn't make a quick but that's for sure. Right exactly -- what about the timing about this because I oftentimes in -- summer can be a bit of a slowdown on Wall Street as you know a lot of other areas as well but. The with the timing of rolling -- silicon the next month or so. -- so what's happening now is. They're finally getting the point they're ready to start this so called road show though maybe last a couple of weeks once that's done they IPO will happen so. We all know what happens in in the United States and even to a greater stake in Europe during August everybody leaves. So I think they they go here's to get this done in the first half of August. When people some people anyway are still around. The Europeans might be at the beach -- a lot of American investors will still be working. And then and then let it settle down into the fall. And then will probably see this period of you know some sort relative stability the stock if things go as expected. And then at the six month point that's when insiders are allowed to start selling shares. And that's when you really get a feel a sense for whether the -- insiders who hold the stock. They wanna get ready -- make a quick profit or are they so -- -- stoked about the company's prospects that the. Potential and again in light of the Chinese economy -- doing what it is doing right now. Is there any trepidation -- from US investors buying into a Chinese company. None whatsoever. Dan in fact. Investors are so star for high returns that they can't find higher returns anywhere in the world really right now it's very difficult. So I think this is likely to be a real successful IPO unless there and -- -- some information should surface along the way that says. That somehow the company's over hyped that doesn't seem likely so I think US and western investors are gonna love this opportunity. What about the folks at Amazon and even -- concern about competition coming into the marketplace because. Right now it indoors has struck that Alibaba is is it strictly a business to business company or not going to be a business to consumer -- -- -- -- mostly -- to consumers summit today it's got a couple of huge. Shopping sites in China. They're similar to Amazon all they -- and in some ways. And they planned to do that here in the United States they've they've already. Sort of had a soft launch you might say of a shopping site called eleven main that is not at a competitor to Amazon has more of a boutique site. And it's very americanized stage it's based in California that's -- its headquarters is. But they're they're sort of getting started in the US retail market and I think it's perfectly reasonable to expect at some point. Alibaba will try to challenge Amazon and to get some share in the USE commerce market. Amazon is a fierce competitor. And Amazon has taken all comers so far and sort of swat -- one after the other down. So. It'll be you know the bottom line is it'll be great for consumers -- wind -- -- sort of two titans. And really three titans because we've got Wal-Mart in the -- here and there are some others like that so. -- in -- in e-commerce market United States is gonna get tougher. But all these companies are really good competitors and they'll survive -- it's just going to be a tough fight. And the bricks from the bricks and mortar come tumbling down reckoned with not Yahoo! finance. On this Friday Rick have a good weekend -- and -- and of course you can keep up latest headlines right here on You've been watching the big number. -- -- --

This transcript has been automatically generated and may not be 100% accurate.

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