Alibaba's growth slows for Yahoo, IPO buzz builds
Hungry investors eyeing the next Amazon-style technology heavyweight tuned into Yahoo's earnings release on Tuesday evening. Keeping a close eye on the results of Chinese e-commerce site Alibaba - with a flotation expected this year - market watchers were left disappointed with growth in sales slipping in its July to September period.
Search giant Yahoo, which owns 24 percent of Alibaba, said that the Chinese online marketplace posted 51 percent revenue growth during the quarter to $1.78 billion compared with $1.18 billion a year prior. Meanwhile, Amazon reported a revenue increase of 24 percent to $17.09 billion from $13.81 billion a year ago for the same quarter.
Whilst this may be seen as scorching growth for Alibaba, it was less impressive than a 61 percent rise seen in the previous quarter, and a 71 percent rise in the quarter before that.
(Read More: Yahoo slides after disappointing earnings outlook)
There was a similar trend in the company's gross profit which has led analysts to suggest that the days of its trailblazing growth may be behind it.
"Alibaba results were a bit lighter than we had modeled so we are reducing our estimate for Alibaba's value to $145 billion (versus $160 billion) before," Shebly Seyrafi, an analyst at FBN Securities said in research note.
Seyrafi now believes that Alibaba alone is worth $21 of Yahoo's stock price, which closed at $38.22 on Tuesday evening. Although after hours trade is pointing to a lower open, FBN Securities has a target value of $45 and has reiterated its outperform on Yahoo.
Nomura analysts Anthony DiClemente and Ron Zember said that nothing in the latest earnings release changed their view of Alibaba's valuation. Nomura currently values Alibaba at $101 billion within the price of Yahoo, which equates to roughly $14 a share on an after-tax basis.
The two analysts acknowledged that their outlook may be conservative relative to some investor valuation models.
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Alibaba, the e-commerce platform set up in 1999 by billionaire Jack Ma, is expected to use Twitter's November IPO (initial public offering) as a barometer of investor appetite for technology shares at a time when talk of a bubble in the tech sector has resurfaced.
Social networking website Twitter priced its IPO (initial public offering) at $27 per share, above the original expected range of $23 to $25. Expectations have been building for months with bankers predicting an IPO that could raise up to $15 billion for Alibaba, according to Reuters, and value the company at more than $100 billion.
A spokesperson for Alibaba told CNBC that the company is yet to hire any underwriters for any potential IPO and has yet to decide on any location, amid rumors that the company is deciding between a Hong Kong or a U.S. listing.
—By CNBC.com's Matt Clinch. Follow him on Twitter @mattclinch81