In a turn of events for Yahoo! Inc (NASDAQ:YHOO), China based e-commerce behemoth Alibaba Group has delayed its IPO in the U.S. stock markets by a month. Bloomberg’s Leslie Picker reported ‘In the Loop’ that the company was looking at a September debut date rather than the August debut date that the people on Wall Street were expecting.
When asked the reason for the delay, Leslie Picker replied, “I think, a lot of it has to do with their reliance on the SEC. They have to get one final rounds of comment back from the SEC, back from the U.S. regulator and then respond to those comments before setting their terms”.
Yahoo! Inc (NASDAQ:YHOO) which holds almost 24% of the Alibaba Group came up with its second quarter results on Tuesday. The company posted a slight decline in revenue, which came at $1.1 billion for the quarter and a small increase of 5% in earnings per share. Yahoo! Inc (NASDAQ:YHOO) share prices have doubled in the last two years due to investors interest in its large holding in Alibaba Group, even though the company is struggling with its core business.
Alibaba Group is also planning to launch its IPO at a valuation 22% less than what the street was expecting. When asked about this Ms. Picker replied, “ the reason you do something like that is that you have to encourage investors to buy shares in the IPO and they are not going to buy shares if they think they are gonna get a lousy deal. So you give them that 22% discount with the hope that they buy shares”
On another Bloomberg Show, Leslie Picker and Cory Johnson were seen discussing if the IPO will sail through smoothly. When Mr. Johnson asked Ms. Picker regarding if the market has the appetite for such a giant deal, Ms. Picker replied, “There was a BDO report that came out actually this week that said 77% of capital markets professionals that were surveyed expect this deal to go well. That’s an overwhelming positive response but you can put that against the backdrop of all the hype surrounding this company”.