Much has been discussed on the possibly of Alibaba Group Holdings Ltd (NYSE:BABA) being the largest IPO in corporate history. Current markets indicate the company could be worth as much as $200 billion. The numbers are truly astounding, as is the success of the company founded as recently as 1999 by Jack Ma.
The issue for me is the sentiment regarding Alibaba is the most positive I’ve ever seen: as such: not that if the stock will be a success but, how much of a success it will be. The absolute certainly around the new listing being successful concerns me. What if investors are too concerned with how much they think they will be making, they have ignored the possible down side risks?
Having used the site I was surprised at the amount of replica and copy goods available especially in the electronic accessories section. If your customer base is content with receiving these types of goods then that is not an issue. But the very public IPO of Alibaba means it becomes an easy target to any company that feels its products have been illegally copied where legal recourse can take place.
This extrapolates through to negative sentiment for Alibaba, enough though they only act as the market place for the actual goods: it’s important to point out that this is no way accuses Alibaba of actively trading in counterfeit products: but the sheer size of their operation could mean, just like Ebay and Amazon, fakes affect future growth prospects