Both U.S. stock exchanges are vying for the biggest initial public offering since Facebook in 2012, and China’s biggest ever. Alibaba, the Chinese e-commerce giant, is looking to raise between $18 and $25 billion on a valuation of up to $120 billion in a rumored IPO early next year. The U.S. is looking like a better option than Hong Kong for the listing since both the NYSE and Nasdaq have approved Alibaba’s proposed dual-class structure, allowing the company’s 28 founding partners to retain control.
Besides being a feather in the cap of U.S. exchanges, and an exciting opportunity for U.S. investors, this is mixed news for two U.S. tech companies. Alibaba’s IPO could easily overshadow the much smaller Twitter’s, which has captivated the attention of the business press thus far. More important are the consequences for Yahoo, whose 24% stake in Alibaba is almost as large as the founder’s. In the short term Yahoo stands to make bank when the company goes public, but in the long term investors who have used the Internet company as a “stalking horse” to invest in Alibaba will no longer need to go through Yahoo. That means Yahoo has to rely on its own revenue, which is still struggling after a series of high-profile product relaunches and company reorganization moves by CEO Marissa Mayer.