According the Wall Street Journal Alibaba Friday unveiled a price range for its U.S. initial public offering of $60 to $66 a share. At the midpoint, this would value it at about $162 billion, on a fully diluted basis and assuming underwriters exercise an option to sell extra stock.
That seems conservative, at least compared with heady analyst estimates that bubbled up this year; some peg Alibaba at more than $200 billion. It would also put the company at a multiple of 32 times earnings over the past 12 months. That is high but not stratospheric by the standards of Chinese Internet stocks.
Alibaba’s seeming restraint reflects that it has been eager to avoid a Facebook-style debacle of pricing its offering too high only to see an embarrassing decline. And Alibaba can still move the range higher if demand is strong.
Source: Wall Street Journal