Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Alibaba Group Holding Ltd (BABA)’s IPO Is Anything But Like Google Inc (GOOGL)’s IPO

Alibaba Group Holding Ltd (NYSE:BABA) does not have a business model of a technology company like  Google Inc (NASDAQ:GOOGL) for example, but many investors do not realise this. In a panel discussion on Bloomberg , Crid Yu, Google China’s former executive, and Paul Kedrosky who is a Bloomberg contributing editor shared their views about Alibaba Group Holding Ltd (NYSE:BABA).

Google GOOG

While Yu tried to see Alibaba’s IPO n the same light as Google Inc (NASDAQ:GOOGL)’s IPO during his time when he was at the helm of the company, Kedrosky strongly disagreed with the similarities that Yu was drawing between the two companies.

“[…] It [Google Inc (NASDAQ:GOOGL)] was over reliance on a single product, a single strategy, a single thing called search, whereas with Alibaba Group Holding Ltd (NYSE:BABA) I think the legitimate criticism is this looks like a conglomerate with many many material contributing pieces of the business, all very difficult to untangle, it seems predicated on a financial not a technology strategy […],” said Kedrosky.

Kedrovsky reminded other panelists that Alibaba Group Holding Ltd (NYSE:BABA) is a conglomerate and not a tech company like Google Inc (NASDAQ:GOOGL). He explained the story behind Alibaba Group Holding Ltd (NYSE:BABA)’s exceptional growth figures and the philosophy of its business model.

According to Kedrovsky the growth secret of the Chinese e-commerce company lies in its low margins, which are the result of low R&D expenses. Low R&D has a very unnatural ring to it, if we are talking about the technology sector. Kedrovsky explained that Alibaba Group Holding Ltd (NYSE:BABA) relies on acquiring various start ups and then shoulders itself on their growth. The company has also recently opened up an office in silicon valley to this extent as it entrenches itself in the US market.

Is the weight of the holding company soon going to be too much to be shouldered by its diverse businesses? How long will Alibaba Group Holding Ltd (NYSE:BABA)’s management be able to find these profitable startups? These are some of the questions that investors might be overlooking while they get carried away in the heat of the world’s biggest IPO.

Warren Buffett and BillionairesFree Report: Warren Buffett and 12 Billionaires Are Crazy About These 7 Stocks

Let Warren Buffett, David Einhorn, George Soros, and David Tepper WORK FOR YOU. If you want to beat the low cost index funds by an average of 6 percentage points per year look no further than Warren Buffett’s stock picks. That’s the margin Buffett’s stock picks outperformed the market since 2008. In this free report, Insider Monkey’s market beating research team identified 7 stocks Warren Buffett and 12 other billionaires are crazy about. CLICK HERE NOW for all the details.

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!