Alibaba’s market value nudges Walmart

Eric Platt in New York
An employee walks past the Alibaba logo at the company’s headquarters outside of Hangzhou, China.
Carlos Barria | Reuters

Alibaba, the Chinese e-commerce behemoth that listed in New York last month, briefly muscled ahead of Walmart by one important measure on Tuesday, when its market valuation surpassed that of the world's largest retailer by revenues.

Shares of Jack Ma's Hangzhou-based group climbed as much as 2.8 percent to touch a new record high of $100.50, lifting its market capitalization above $247 billion.

At that level, Alibaba was just $2 billion short of the list of the world's 10 most valuable companies, within reach of Swiss pharmaceutical groups Roche and Novartis. Alibaba would have reshuffled the coveted top 10 had it not been for better than expected third-quarter results from Novartis.

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Alibaba's stock closed at $99.68, trimming its market value to $246 billion, a few hundred million dollars behind Walmart.

Walmart, with 11,000 stores in 27 countries including China, reported revenues of $473 billion for its past financial year, compared with the $8.6 billion Alibaba collected from its online marketplaces.

The gains on Tuesday follow comments from Mr Ma, the company's founder and executive chairman, who told a conference on Monday evening that he was interested in working with Apple on financial payments.

Alibaba: Market top?
Alibaba: Market top?

Alibaba floated in New York on September 19, the day that remains the peak for US equity markets and preceded a near correction in the benchmark S&P 500 index.

Its shares, which were priced at $68 a piece, rallied 38 percent on their debut day, as underwriters took hours trying to match orders amid heavy demand. Alibaba eventually opened for trading on the New York Stock Exchange at $92.70 and touched a brief high of $99.70.

Over the past two weeks, several Wall Street analysts have unveiled their targets and ratings for Alibaba. The company has received a warm reception, with more than three-quarters of brokerages recommending the stock as a 'buy'.

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Jefferies, which initiated coverage on Monday, said it expects Alibaba to remain the dominant online retailer in China over the next decade.

"China's changing internet user demographics and mobile development support our favorableview on e-commerce for the next decade," Cynthia Meng, an analyst with Jefferies, said. "We estimate well over half of the Chinese population will be shopping on Alibaba's platforms in 10 years."

Revenues are expected to reach Rmb 130.5 billion ($21.3 billion) in 2017, a 149 percent rise from fiscal 2014 levels, according to analyst forecasts collected by Bloomberg. In contrast, Walmart's sales are projected to climb 7 percent over a similar period to $522 billion.

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The many banks that underwrote the record $25 billion offering are still restricted from commenting on the company. But that lock-up period, which will end in the coming days, may fuel additional movement in the shares ahead of Alibaba's quarterly results next week.