Transcripts For BLOOMBERG Market Makers 20140919

Here at this time on facebook day. We will see how alibaba turns out. There are so me great reasons to host a show at this time. This has to be near the top of the list. There are so many expectations. Almost 168ed at billion and it hasnt even traded yet. Lets take you down to the floor of the Stock Exchange. Just ended an interview with the man of the hour. Emily, tell us about jack ma. He is incredibly excited, as you might expect. I got myself the with jack mom. That has been 15 years in the making for him. He started the company in 1999, and the internet rarely existed. People thought he was crazy. He got 17 cofounders who believed in his vision. A third of those cofounders were women. Onre was a lot of excitement the floor of the New York Stock Exchange. He had alibaba customers in town visiting from china. They are the ones who rang the bell. He did not ring the bell himself. That is a pretty humble. He knows there is a lot of work to do. We talked about u. S. Expansion and a timeline for that. We talked about challenges of working with the Chinese Government. We talked about what he is going to do with all of this capital, will he buy yahoo . It is not going to be going in that direction. He and Marissa Mayer do talk. Workinghave a relationship. Yahoo is a major shareholder in alibaba. We are going to see how this day will play out. Did you detect any anxiety partps, misgivings on his about how the stock is going to trade . Everybody who bought in on the ipo and everybody who is going to buy after the first trade wants to know how well it is going to do. It is the New York Stock Exchange going to screw up the way the nasdaq did . Going to manage the buyers and sellers so that it opens cleanly and everybody feels good . Did he reveal any of that to you . That jack momense is very relaxed. He has been doing this for a long time. He has been to this rodeo before. He took them public in 2000 seven. 2007. He is a big fan of tai chi. Is how he fosters his and mentality and zen spirit. He is very relaxed. A lucky number in china. I think he thinks that luck is on his side. Amounts to a great deal of money. I know youre coming back to us a little bit later. Emily chang is on the floor of the New York Stock Exchange. We are going to be watching for their first trade all morning. We have two great guests. He served on the board of yahoo from 1996 to 2011. He was there when it made its investment in ali baba. This is one of the best investments of all time. David kirkpatrick is here. He is a bloomberg contributing editor. From the getgo, why was alibaba interesting then and wire the interesting now . We had to have a partner in china. Alone and to do it did not work out. They were declining in market share in the needed a partner. They were introduced to jack mom jack ma. Mom yahoo wound up becoming a partner with them. That 1 billion. Thatwere not the alibaba we know today. They were not the dominant Ecommerce Company in china. What did amount to at that time . Was it a hedge . You couldnt see what alibaba would become. What did seem at the time that it would become . It did seem that it was going to be a very Strong Player in the ecommerce world. They were fighting ebay. Ebay china disappeared. Jack said in the interview on bloomberg tv that he had a dream. It we believed in the dream. How has your opinion of alibaba evolved over time . Have visited their offices. I have seen jack speak. I was blown away. Wire you bought away . I had never seen such adulation of a business figure anywhere ever. There is an open adulation of jack ma in china. I had never seen it. This is the woodstock of the ali baba ecosystem. Foriew has changed that years ago it was important. There was not any talk of expanding outside of china. Naturempressed with the of chinese ecommerce. It was already becoming more sophisticated than in the United States. China. O primitive in ecommerce has been their way out. Middle of an the dominant country of the way the chinese economy wants to grow, which is with ecommerce. I think that is a very big deal. What does being public do for alibaba . You have been involved with many public companies. Is beauty of Capital Markets it puts a price on what you are. That can be a curse as much as a blessing. Aboutof how we would talk. Och industries were public if we dont because they are not public. It is a blessing and a curse. Is blessing is alibaba littleknown in the United States. It is making a huge arrival on the scene. They will be a force to reckon with here in the u. S. And europe. They do business in a different fashion. A are very profitable. They are very profitable. The curse is they need to be more transparent. That has always been one of the issues with alibaba. You are what your stock prices. You are good or you are bad. I would make a big contrast with facebook. Mark zuckerberg never really wanted to go public. To this day he wishes he didnt have to. A choice. Really have your investors demanded. Jack ma always wanted to be the global figure he is becoming. Play thatsuited to role. Zuckerberg is more of a public person. Jack ma loves the spotlight. He handles it brilliantly. How does that make him a different executive than a Mark Zuckerberg . There is a similarity and that they are incredibly inspirational to their employees and to their customers. They are different. Zuckerberg is never going to wear a mohawk costume. Has donehat jack ma that among other things that he does. Jack ma is more intelligently imageconscious than zuckerberg. That is important for a company that has so much intersection with government. Engageg does not openly enough with the regulatory policy. Jack ma is a super public eye. Lets talk about why everyone is buying this deal today. If you ask a large amount of investment people out there, it seems that alibaba is the newest drug and they are feeding it. You have hypergrowth. People will always by hypergrowth. The numbers are staggering. We can pull them up. They putbase amazon to shame. 43 margins. Profit lastn net quarter alone. They do 80 of all ecommerce in china. These numbers are staggering. Do you truly trust all of these numbers coming out of china . They raise an eyebrow. I would not say i truly trust these numbers. You cant be sure because they dont have the same margins. There is a lot to that. A lot of people say this is extraordinary gusto. There is a lot of other frothy stuff going on. People are so unquestioning about alibaba. Hasink the Company Extraordinary numbers. It has an extraordinary business. Isre is no question that it a brilliantly managed company that is doing well financially. Are they comfortable that the risk is worth taking at 68 . That is a great way to put it. Share,ve got 80 market people will take a flyer on you. They are to put those regulatory issues of uncertainty to the back of their minds. I think the numbers are probably not that wrong. They did go through some due diligence. The bankers that a lot of due diligence. The numbers have to be there pretty much. There are many, Many American ifpanies that are as guilty not more so because we dont , of earningsibaba management. You are much more financially savvy than me. I dont know about money. What do you think about the structure where what you are buying when you buy alibaba is a holding company. Oh it is not the assets of the company. Does that worry you at all . It does long term. Think the investors have decided they are not even going to try to understand the structure. It is very opaque. The next not affect year or two or three. Longterm and mike. What are going to look up long term investing is because we havent seen in quite some time. There are 20 of questions about their Corporate Structure and. Cory johnson will be here. Yahoo is cashing in on a big chunk of its alibaba stake. Now Marissa Mayer has to put to work. Welcome back. T is ipo day for alibaba i am Erik Schatzker here with stephanie ruhle. We are waiting for the first trades. This is the biggest u. S. Ipo in history. The share is riced at 68. The company is valued at 100 city 7 billion. The stock is going to be worth a whole lot more. There is plenty of excitement behind this offering. As you are aware by now, some cautionary signs. We dont want to gloss over them , including a very confusing Corporate Structure. Torre johnson has that part of the story. An interesting deal the way this is set up. You dont see Many Companies with such confusing Corporate Structures where the are not just because it is in china. Is from the sec filing. I was trying to simple five the structure. This is what they have got. You have got Holding Companies in the Cayman Islands. Companies hold other companies in china where they dont have direct control of. There are other contractual arrangements that jack ma owns 90 of. This is a very complicated structure. What would you a set of ownership . Proxy, maybe . Hope . Investors hope that jack ma will have their interests in mind. It is low said that on his list of priorities. He has proven that. There was the case of alibaba. Com which was public before. It is part of the offering today. Ofalipay. He example the government would not let them be part of the company. They took it away. I am going to interrupt you for one moment. We are waiting for that first trade. We are getting the first indication from the New York Stock Exchange at the opening shares will bea between 80 and 83. There is no certainty that the stock will open at this price. Areman sachs and barclays working together with the New York Stock Exchange trying to match buyers and sellers and come up with a price that can stick. Indicationing the that the stock is going to open between 80 and 83. That is a 15 pop on a 68 ipo. That is more than 10 . That is quite a bit of money. That is about 40 times earnings. For a company that is growing at a decent clip, that is probably about right. Valuationt a market that makes it one of the most valuable companies in the public markets. That is an extraordinary thing. That makes it better than intel and citigroup. A 200 billion market cap would be very impressive. What do you guys think . I am not surprised. Wanted to learn from the fiasco that was alibaba. Com. The price plunged after opening. Nobody wants to repeat the fiasco with facebook. The number to end up higher. Considering they have operating margins that are so much higher than other Internet Companies, they were pricing it said theylly almost were insisting that have this kind of pop. Would trade higher than 80. Points go back to the that cory was making. Shareholding shareholders are buying into . Trust jack ma to do the right thing . He has already told us that the shareholder comes third. Isnt that ok . This is directly from the filing. Customer is first, employee a second, and investor is third. I know that some people will find this hard to understand. If you are a shareholder, maybe you like that. If the customer comes first then more dollars are coming in the door. That is the longterm view. Thank you very much. That is no different than google or facebook. They dont give the shareholders priority. Heres the difference. This is not an aggregate. We know what he knows when he says that. He thinks it is best for the customers to take assets away from shoulders shareholders, i have done it before and i will do it again. Saying he will take assets away from shareholders if it is in the best interest of my company. One of the things i get in trouble for saying is that he really does believe facebook is changing the world. I think gates was motivated by that kind of thinking. I think jack ma is motivated by that kind of thinking. He wants to help the chinese economy. He is expanding globally and thinks he can be a key part of global commerce. That is more important to him that his personal wealth or the wealth of his shareholders in the short term. Whatever aggregation of pieces it might be. We might see some strange behavior. Why did he buy into a soccer team . Whited he buy into a movie studio that had bad accounting . He wanted to be cool. , isnt that the classic really successful guys who make a ton of money by things. It is the nature of the chinese internet. Chinesecompanies in the internet are more broad in their self conception than the american Internet Companies. They believe they can do almost anything. From their point of view, it is not crazy to buy a soccer team. There are all kinds of things like that that will not happen in the u. S. That happens in china. You are right. These the kinds of things we have to get used to or had to get used to with facebook and google. A do create attention between a tension. Ate jeff bezos never seems to have to answer to anyone. Investors, they dont exist. Short termors have a view. They dont care about governance. They do want to be focused on the bottom line. Jack ma loses sight of the bottom line. Everyone is in trouble. Investorsyou think wont cut him the break they cut jeff bezos . Im not saying they wont. He has to take 42. 5 away. The chinese internet are a third of the largest 20 companies. They behave very differently. The Business Model is different. In the u. S. , we should be concerned about this. They have thinking that is out of left field. They are going to do disruptive things. We are very complacent and arab businesses. I think we should be very careful. The chinese are coming. , when they come to the u. S. They will play by a different playbook than we see in our Internet Companies who are more polite. These companies do not operate politely. Is that a different Business Culture . I would say it is. Becoming the Signature Companies of the entire chinese economy. I think that is the way the chinese leadership looks at them increasingly. Replacing him . Oil companies. Who cares. Look what happened to the train network. Are the Signature Companies of the economy, theyll license to do almost anything they want. Now that is a thought. I do with the point out that we have opening indications on alibaba shares. And 85. Between 82 that is an opening pop and a half. When we come back, yahoos 1 billion bet on alibaba pays off. Alibaba will trade this morning and the indication that we are getting from the New York Stock Exchange is that the stock andoing to open between 84 80 seven dollars. The first indication we got about 40 minutes ago was it would open between 80 and 83. It is remarkable that the stock the opening trade is being managed by Goldman Sachs and barclays. They were the underwriters of this offering. They are working with the New York Stock Exchange right now. Some of this is happening on the floor. A there is still a human factor. Happenct that this will before noon. All bets are off in some respects. The New York Stock Exchanges is being very, very careful in light of the bitter memories over the face book facebook offerings. That happened at the nasdaq. It hangs over any Public Offering of this size and scale. We need to make this conversation a bit broader. Weve got to talk about yahoo . He served on the board of the yahoo until 2011. He was there when they made that extraordinary investment in alibaba, one of the best investments of all time. Lets not forget about andrew frank. Lets start with you. When you look at yahoo right ss yahoo . Libabale they have a massive infusion of cash. They will be under pressure to do something with that. There is some disillusionment in their core business, which is valued it negatively relative to. Heir investment in alibaba there will be pressure to do something dramatic with this cash. A holeou think will burn in number is a myers pocket . Something like that. She is sitting on it though already. I wouldnt call it tumbler extraordinary. They paid a lot of money for it. Withat still leaves her 48 billion, or whatever the number is. The coreo fix business. If she does not fix the core business, she should think kiss the whole thing goodbye. Their technology is antiquated. Her mobile offerings are lacking. Bolster that. She can make acquisitions to bolster that. That should be her only focus. The best way to fix that is with acquisitions. I would assume. The you agree with that . Acquisitions that drive advertising. Advertising technology, which is what they lack. That anyd say longterm battle between the vision of god who as a Technology Company and ruvell as a Media Company, the Media Company is going to win. This is buying content and distribution. If you agree successful media companies, they are diversified. They dont have one specific site or offering that there depended on. In the modern world, there should be no distinction. I think that is why google has done so well. That is why facebook is doing so well. Between technology and media, you dont have to make a choice. You have to do it with smart software. I dont know. The problem that yahoo has is there was always this tension. We have to be a tech company. We are offering media offerings. Based onwere picked being a tech ceo or immediate ceo. They have to be driven by technology with great content. All of thewhy Newspaper Companies have gone down like a lead balloon. They did not develop tech. They have been bypassed by Silicon Valley by companies that did not think of themselves as media companies. Isnt this a happy accident . Yahoo was contemplating getting rid of all of its asian assets. Add them together today and we are talking about if the stock really opens that 87, this will be worth 50 billion. There was no stacks tax structure that made any sense. Shouldnt yahoo be tipping its hat right now . Lot to jerods a yang. Them, there would be no yahoo japan. Should yahoo have the haydon . Hate on it . He pressured the company to in alibabats stake for how much . 7 billion. You have to remember there was a big entity called the Chinese Government. The government said it is impossible to have a company like alibaba so dominant in our marketplace. If you add in softbank and yahoo , the majority ownership was foreign. Jack was under pressure to limit that ownership. That is why yahoo had to sell some of it. They should not feel any remorse if they gave back half of the stake . They had no choice. This, are firmly with there was this commitment made that alibaba would go public. That brings us to now. An ongoing relationship between yahoo and alibaba could have a lot of sim biases. There could be complementary things that they bring to the table. Alibaba could not get there on their own. They need yahoo to help them. They know where to find one another. There is a lot more to it than just finding one another. There is an infrastructure that exists that they could use. Try to get inbaba the commerce with some branding . We were talking about what if alibaba and amazon did a deal . I could see them partnering with yahoo to do something that was creative and not just about advertising. Is still a pretty good brand. For some of then these sitting at the table. Do you know anybody with the yahoo account . Jack ma is going to have all this money to play with. Much more than a Marissa Mayer will. If yahoo is the ticket, the entree to the american market, why not just i yahoo . He thought about it before. He might very well do that. He buys back the ownership that yahoo has an alibaba. Think what he said in the interview with you guys is we like organic growth. We will do anything that helps the small merchant. I think he is going to do a lot importing the marketplace more than in china. Is at a disadvantage. They take ownership of the merchandise. A alibaba is purely a drop shipping company. It is purely a platform. If you import that model into the u. S. , you can have a substantial success here. Who should be most afraid of alibaba right now . Now that they are truly flushed with cash . Yahoo has to sweat a bit. There is pressure on them to do something. I think the other asset that alibaba brings to the u. S. Is something quite new for china. This is a new vision into the Chinese Marketplace. Patterns of behavior we have not seen before. It is competitive with some of the ad networks and exchanges that we see growing here in the u. S. Google or an apt mix. Thank you for giving us your thoughts this morning. We need to head down to the exchange. The latest indication is alibaba will open between 84 and 87. Why does it take so long . Julie hyman spent years reporting from the exchange. Tell us what is happening right now on the floor. Erik mentioned there was a human element, they would like this ipo versus you giving this to the nasdaq. The main selling point. Hugh had humans on the floor of the exchange who are aiding this price discovery process. Offer price ate 68. The following morning, the person who is the market maker on the floor of the New York Stock Exchange holds an auction between buyers and sellers throughout the morning. It is not entirely a human process. That person and the other traders on the floor are getting order flow through their handheld devices. They are getting it electronically. The human person there controls that and monitors it and monitored moderates it. It determines where the opening price will be. He will try to get a better idea and a more narrow range as the morning progresses of where the exact price should be. They try to match the buyers and the sellers as we get toward the actual open of the stock. That is the process that a ghost or. The New York Stock Exchange will want this process to be very slow and elaborate. They want to price it at the right place and not see any kind of chaos. You will likely see a lot of volume trade in the stock, you dont want it to be chaotically traded. You wanted to happen in an orderly fashion. You make a great point by raising twitter. Twitter came after facebook. They were managed. s iss just as alibaba being managed by Goldman Sachs. Twitter popped 73 on its first day. We dont know if that is going to happen with alibaba. It does give a sense of the conservatism in this process. There is this alchemy of where you price an initial Public Offering and how much you want to go up in the first day and the beginning days of a stock. You did see that big increase with twitter. It happened in an orderly fashion. The New York Stock Exchange took its time opening the stock. It took over an hour to open up twitter. There was a deliberateness to the opening process. Thank you so much, julie. It makes so much more suspense sense for them to dot every i and cross every key. You have so much of stake here. Can you imagine how much they are writing potential new deals . Truth be told, they want us talking about it as well. They want people sitting there wondering why hasnt the sting traded yet . People do . Today they have work to do. Kidding. Just kidding. We will be back in just a minute. We will have that will make him back. You are watching a special edition of Market Makers. Welcome back. This is a special edition. It is deal time. We are now getting the updated 86 to 88. Tion of we know that is a lucky number for him. If you invested, you like the indication now. At their taking a look home market. Chinese china may be the biggest growing market in the world. Risks to some operating in china. Google and others have found out. We are looking into the blessings and curses of this country that is so dependent on the consumer. This is a huge historic day for china. A to really understand the prospects that will be driving alibaba, you have to look at the chinese economy. The first thing you need to know is that china is the second largest economy in the world. They will soon take over number one, the netted states. It is a managed economy. Set,growth targets are they usually get them. They do it in a very contained and methodical way. They communicate what they expect and they usually a chain attain those targets. There is a growing middle class. He is emphasized the need to go from a manufacturing economy toward a inception driven economy. Takeis really going to alibaba to the moon. I think that is an interesting way to look at it. For is the Perfect Company him to get excited about. If he wasnt a chinese citizen, he could buy the shares. This is a great way to look at it. Increases. This is almost the product of the commonest party. Communist party. A lot of them are state owned and statecontrolled. It is for a much the case that jack ma works very close with the government. Love with the government, but dont marry it. They work very closely in a setting rules. The Chinese Government sets the infrastructure for the internet. They set what is going to be on in terms of content. They censor a lot of content. They also set the narrative for what they want in terms of whether or not they will criminalize what is happening. About not just complained people vocalizing what they think is wrong with china, he has criminalized it. If you post on the internet and it has been reposted over 5000 times. Does not scare you . Of course. Lovely. Jack ma is friends with them. Is theink alibaba Perfect Company for any modern economy. The chinese dont have much infrastructure. Does everything in the traditional world where goods are managed locally and drop shipped. You could not have a bigger economy with no infrastructure without alibaba. Who to thank. Bout emily chang is going to be sitting down with the ceo of softbank. This forstrong hand in the last five or six years. That will be a great sit down. Lets not forget that softbank is also a key figure in the deliberations with sprint and tmobile in so many other ideals that they could be doing if they could figure out a way to get them done. We continue with our conversation about china from hong kong. Welcome paying longer ping wong. Ng w public decided not to go in the hong kong. Does that make the way you look at it different than the way we are looking at it today . I dont think that makes a difference. Alibaba is different from a company likey amazon or ebay. People are talking about they are a similar thing. I can say that they are different in the in a. Successful andry good example of culture in china. Brings a different kind of internet dna to the world, how is that distinct from what we know here from Silicon Valley . We have to know about a difference between Silicon Valley and china. Leadingvalley is the ecosystem. It is open and free market. It encourages innovation and creativity. In china, it is a closed market. You cannot enter into the china market. It is a closed market and alibaba has nurtured in that environment. Basically, they know the game. They know how to work with the government and how they expand their business in china. China is the worlds biggest consumer market. It is the worlds factory. It is a unique supply and demand environment that makes alibaba very successful. Reduce theificantly retail price. The chinese shop more often than americans. Every month. You cannot compare alibaba with google and facebook. It is a Global Competitive market. Thank you so much for joining us this morning. She is the secretarygeneral of internet sobriety in hong kong. It isa foreign startup, impossible. As a local startup, it is difficult to be a start up anywhere. The Chinese Market is so vast and so big and there are so many things to be done and so many opportunities, there are a ton of chinese startups. You are seeing more individuals go the start up route in china. Whereome from chinas they were expect to work in corporations. That goes back to the one child only policy. A couple is supposed to take care of the family. They will often live with the family. These big corporations are where you can make money. They take a risk and not have a steady paycheck is considered taboo. Many people culturally do not do that. You will not bring dishonor to your family. You dont see that culture is prevalent there. Tier one andoff in tier two cities. The most prominent startup scene is in shanghai. It is seen as the business cosmopolitan center. Beijing is seen as the Political Center in the economy. There is a freetrade zone in shanghai. You are seeing a lot more individuals step in. There is a lot of poaching. It is hard to find a chinese local individual who is willing to bet on the start upside. Thank you so much. Great conversation. We are going to have more we come back. Emily chang is going to be sitting down with the ceo of softbank. Alibaba is debuting. Live from bloomberg headquarters in new york, this is what Market Makers. We are waiting for that first trade alibaba shares are priced at 68 and may begin trading at close to 90. Has him words and he talks about going public and what he might do with all of that new money. Putting the New York Stock Exchange to the test and getting the alibaba listing was a huge coup and now the exchange hopes to avoid slack. Welcome back to Market Makers. We are still waiting for alibaba. We are here on this special edition of Market Makers. Ppo and he was there when yahoo made its fateful genius investment in alibaba and David Kirkpatrick is here. Cory johnson is with us from San Francisco. Lets begin right here bigger than facebook. That is what alibaba is going to be if the stock prices where it appears to be headed now. The indications we have at the moment are that ali baba will start trading between 88 90 per share. If it is 90, the company is worth 221 billion. Worth 199 billion. Thats incredible and frankly, when i say that alibaba is a better longterm company and facebook, i think its a great company. Why is that . I think facebook is still positioned for extraordinary profit and Revenue Growth is of their increasingly good position in mobile advertising. I think they are still on an upward trajectory and things are much clearer to understand there. Nothing negative about alibaba. A gamebook culturally is changer but from a dollars and sense perspective, do you think they will grow to be more significant than alibaba . I think oath will grow very significantly. Alibaba is just at the beginning , its just a Chinese Commerce company and has the entire world to conquer including the United States. That is true but can they conquer the world at a 43 margin . This goes back to what you are saying about facebook and its potential as an advertising platform, right . Advertising is valueadded product and alibaba connect buyers and sellers and if there is competition, that seems to be open to margin pressure. Alibaba is a payment and insurance company. They give credit to people. Imagine the data that they have. All of that is built into alibaba. We have not seen this model in the United States yet. Of the worldse largest money market funds because they are offering higher Interest Rates than the banks in china and i have 98 billion or more in their. Weight will go to cory johnson the right now, lets take you back to the floor of the New York Stock Exchange. By withang is standing the ceo of alibabas biggest shareholder. There, the chairman and ceo of softbank and alibabas biggest shareholder, you came all the way out here from japan, why . Because it is an historic moment. I am very happy to celebrate. You are not selling any shares today. How did you make that decision . This is only the beginning. You and jack ma have had a yearlong relationship. What is your relationship with him like . Is my best friend, best partner. Its a life time partnership. What do you want alibaba to do next . What else would you like them to do . Alibaba continues to grow inside china but also grow globally. York is a good entry. To the Global Expansion jack ma told me he is open to a joint venture with amazon. What would you think of Something Like that . Said butt know what he [indiscernible] and anything could be possible if it makes sense. How would you like to see them expand in the u. S. And abroad . Alibaba has a great platform, Great Technology and global market. If you look at the global market, there are so many Small Businesses that they want to grow. Alibaba provides a great platform for that. How do make sense of all the acquisitions and strategic deals they make in sometimes unrelated Industries Like a soccer club or pharmaceuticals or films. . In the long run, they all converge. They all need to have the internet content, internet delivery. It all converges. What are you going to be doing . Secondyou were japans richest man and you are the first richest man now. How do you plan to spend your earnings . We have lots of dreams also. So this is just the beginning of our journey. I know you do a lot of philanthropic efforts. Many people need help. Feel that there was a big aspect and nuclear which i feel we have to contribute something for that. How is the new ceo of sprint doing . Is a fantastic guy. He is a fighter. To be in the position of underdog and fight tax and fight back. He is like me. We start from nothing. He loves to fight for winning. Why didnt it work out with john leger and t mobile . Uh, we cannot make decisions, somebody else makes the decisions. I asked jack ma what he would do with the capital. Would he buy Something Like yahoo . Someone told me softbank goodbye yahoo would you consider Something Like that . That is a dangerous question. Congratulations and its great to meet you and excited to see where alibaba goes today. Thank you for joining us. Thank you, emily chang joining us from the New York Stock Exchange. We will take you back out to the west coast where cory johnson is waiting in. Talk to us a little bit more about the relationship between softbank and alibaba. Its incredibly tight. Friendships aside, this is a business relationship and theyve got a Huge Investment with every trade of the stock of greater value. It gives softbank the availability to borrow against that and giving them more sprint to build out which they will surely do. Its worth noting that as it comes to voting their shares, they have promised that they will enter into an agreement now ,hat the ipo is happening softbank will vote all of its shares with alibaba in every shareholder vote as long as they hold a 15 stake in the company. It really is a hand in glove situation. How much of a benefit is that to havelike jack ma the premier japanese Venture Capitalists standing behind you . Its huge because jack ma has global intentions and wants to expand. Masa has enormous experience in the rest of asia and influence in the United States. Masa himself as victim dissidents has big ambitions because of sprint. It is working in tandem and working together. I believe that jack ma is on the softbank board as well. What does it mean about softbank plan to grow . He just bought brought in an executive from google. Watching matsiyosho son, his energy has never diminished. Reallys Brandon Alibaba partner to try to do Something Interesting in the u. S. . I hadnt thought about that. Watching son on there now, i realize that this alibaba ipo is really a change in the internet landscape of the planet. Even though the company is important, the prominence it has suddenly gained by being a Public Company and getting the kind of attention we are giving it today, it is really focusing on the reality that this is a global network. Its not just a bunch of American Companies running roughshod over the planet. Its a big change in alibaba is a new force that will change the whole landscape, i think. Gentlemen, stay with us. Its a big day for alibaba and we are talking about it its also a huge day for the New York Stock Exchange. It wants to validate jack mas decision to give it a big listing. President is the new of the New York Stock Exchange and is on the floor of the exchange. Congratulations, a lot of pressure, what is the timing, when will we see this thing . Good morning. Its great to be on the air with you. Its hard to say exactly when it will open but this my best guess would be the next 20 or 30 minutes. Say 11 30 a. M. , we might actually see alibaba trade. Can you explain to people what is different about the New York Stock Exchange . What are Goldman Sachs and barclays doing with the Exchange Rate and had to get the opening price through these indications to make sure that only good things happen . So much of the talk in the equities market is about speed. Its about getting it right and thats why maybe it will open in 20 or 30 minutes or maybe it will be an hour or two but the key is that we get it right. Modele it a distinct where we have humans so we can make rational decisions and make sure the entrepreneur gets the full and fair price on that stock first comes into existence. What to the humans do better than the computer . Thats the reason why you have an auctioneer or a pilot on takeoff and landing. You can have systems that take into account most scenarios but they do not take into account all scenarios and you can have a human that says wait a minute, i have an imbalance between buyers and sellers or vice versa. Lets call around to the market and make sure they understand where the ipo was going off and maybe take a few minutes and build the book and get to the point where supply equals demand and then open it. When you say how important speed is coming makes me think once alibaba is out there its going to fall into the dark pools. When it does, that will not benefit you. How will you feel about that . The New York Stock Exchange, we are the largest stock trading venue in the world. Certainly, there are dark pools that are doing an increasing amount of business in the u. S. One thing i work on personal is trying to simplify this equity market in this country. I think we have lost our way to some extent. There are 60 venues of size to trade alibaba stock and there are hundreds of order types. It has gotten too confusing. I think the man on the street feels the same way. We are going to simple by the market and we have taken a number of unilateral actions to do the same. On a day like today, with alibaba set to trade, the New York Stock Exchange provides a very exciting and convenient backdrop. Today, as you look at the floor, is there any more of a reason to have the floor today than there will be tomorrow . So little trading is going on with the possibility for this human involvement to occur off the television screens, they wonder why its necessary any longer . You hit on a key reason. Everyone in america or at least everyone in the finance world and people like my father who not in finance are talking about alibaba. This floor is part of the reason for that. We have 40 Media Outlets and dozens more we send out feeds to and it enables a company like alabama to get their message out to investors but to the prospective customers. Everybody is watching today. What happens on monday and tuesday when many of those tv crews are gone and when this big party is over . What is really happening . What will be the justification Going Forward . I will give you a great answer tuesday we have the Largest Colombian Bank and most Profitable Bank doing a 1 billion ipo and they will benefit from the media megaphone effect you get from listing on the exchange. On wednesday, we have citizen bank doing a 3 billion ipo. That will happen on the floor. Let me say that its not just about having a listing here on the floor. Its about the humans that open and close the stock every day. On our market, opens are less and tile less volatile more trusted so thats the value that this floor brings. Congratulations, big day for you and it sounds like you will not take vacation next week. Tom farley, the head of the New York Stock Exchange, congratulations. The New York Stock Exchange on not just be the site of the first trade in alibaba shares. Of an earlier the site interview that our own emily chang had with the founder and executive chairman of alibaba, jackma. Lets listen to some of that. To be a Global Company dealing with any government is difficult. Its a great opportunity if you do with the government well and the commit and can indicate with them and listen to their problems and solve their problems and tell them they are your problems that is opportunity for communication and thats what we supply for the past 15 years. Be in lovery to say with the government but dont marry them. Thats our philosophy, making sure that you solve the problem they want to solve. Jack ma speaking to emily chang earlier. Be in love with the government but dont get married. That is one of the things that makes alibaba so unique. Its an oddity to think of a company this important. This is a landscape shifting company and yet based on what the he just said, they are an extension of the government of one particular country. I cannot help thinking of the ihole controversy over huawe when they were booted from the United States because it was perceived to be an agent of the Chinese Government and after Edward Snowden came along, all the American Companies or agents for the u. S. Government also whether only willingly or not. It makes me nervous about alibaba. Wants themvernment to do, he will do. He will operate globally and i dont know what that means. What does that mean . He has no choice. Saying it and a very eloquent fashion but the fact is, if you operate in china, you are by definition an extension of the Chinese Government. Chinese that, if youre living overseas, the Chinese Government uses the diaspora everywhere to be an agent of theres. Its a very directive economy. Its planned. Its the old communist system transported to the modern age. In that sense, at the end of the day, its commerce. Im not quite sure what malfeasance can happen out of that except that we might they might know what youre doing, at the very least. Im just saying its a weird situation when a company is that critical to the Global Economy as they clearly intends to become. Anyone government. Thats the chinese system. The American Companies thats the chinese system you are just drawing attention to it. Is nothing to worry about that we might find something later. We are saying facebook, twitter, Alibaba Alibaba is not a tech company. Just as much as all the rest. Alibaba is a tech company. They have a huge platform. Transactionsing and logistics on that scale. You have to have a lot of technology. Unlike facebook or twitter, they are not proxies for a government potentially. Proxy is a strong word. I just think no American Company would ever say anything remotely similar to what he said about the u. S. Government. They would say quite the opposite. What will be interesting is if they operate in the United States and the u. S. Government agency asks for data the same way they asked of the others, what will happen . Will abby will alibaba u. S. Be willing to give up their data . They might go into consumer businesses in the u. S. So with that be a competitive disadvantage . Other Companies Might say thats a way of giving your data to foreign governments. Lets let cory johnson weighin. I think alibabas growth in the u. S. Is something they talk about. The truth is, their International Business as a percentage of revenues has been falling dramatically. Three years ago, over 20 of the revenues were from international sales. Thats down to nine percent on the trend has been very steady there. The overall business is growing, the International Business is growing, but as a percentage of revenues, if you are in alibaba potential shareholder and you want to wait until they look at the u. S. , they have been looking at the u. S. For a long time and that business is a smaller part of alibaba today than it was a year ago and smaller than it was two years ago and smaller that was three years ago. The trend is preclear. We will continue this conversation. Weve got to take a break. We are still waiting for the first alibaba trade, the latest indication of the stock opening about 91. 8990 one dollars which is a range but it keeps creeping upward. Amazing, plus we will speak to a fund manager who will snap up alibaba shares for his etf at a high price. Is is Market Makers on bloomberg television, streaming on your phone, your tablet, and bloomberg. Com and now available on apple tv and amazon fire. Specialme back to our alibaba edition of Market Makers. We are still waiting for the first trade. Noted break, eric something extraordinary as we talk about the indication creeping higher, 91 in terms of alibaba. Its not moving. That would be shares of yahoo as part of this ipo, yahoo is 140 millionill alibaba shares which was at 68 with the ipo price last night. Yahoo will have some 383 million shares of alibaba left. Worth 35ats billion. There is tax exposure there as there is to the 140 million shares they sold last night but nevertheless, if you take out point5 billion and eight 2 billion and the 3. 4 billion in cash and equivalents and add back one point one, youve got a deeply negative value for yahoo we have to correct that because of the Tax Implications of the e, the potential shale sale of alibaba shares but leaves us with an inescapable cool solution that investors think the remaining bits of yahoo the Advertising Company is not worth much. It is negative. It is worth minus whatever. There is really no confidence that management has a plan to fix the core business. Investors dont believe it. The company has not said anything that is comforting in that respect. It is high time for them to make a statement and say heres what we will do. Im afraid i would agree that its not clear what the heck the plan is. Really saynk we can what the intention is. Aey said we will be more of tech company but we have not seen a ton of evidence of that. They are still sort of a Media Company with a fairly bad advertising program. Should alibaba try to be a Media Company . I think the answer is yes. They are a tech company but a lot of their technology is antiquated. All of their ad Trading Technology needs to be replaced with modern technology. Theyre mobile technology is nowhere. They are in the heart of Silicon Valley and have the means to fix that. There are companies they can buy to fix that. For some reason, they have not laid out a clear plan. Here we are at 91 per share. That would put alibaba at it 227 billion market cap, around the same size as procter gamble. Its extraordinary. The stock it open for trading at any moment we will take a break and hope to catch it on the other side. Makers, arker special edition, the first day of alibaba making its trading debut after a recordsetting ipo on the New York Stock Exchange. We are back in two minutes. Welcome back. We are talking about alibaba. The stock is indicated to open a price of 9290 three dollars per share. If it opens at 93 and thats clearly possible, that would give alibaba market cap of more than 230 billion. Lets take you back to cory johnson in San Francisco to put it into perspective. A few moments ago when the stock was indicated to open at 92, we were looking at 227 billion him as much as procter gamble. Where it is 230 put it . Its just below Jpmorgan Chase. Its a fairly amazing thing. When you think about what the business is, you start to look at walmart which is the biggest retailer in the world and has a market cap of 246 billion. We are talking about some giant numbers here for a Company Without any meaningful debt in any way. It is a fascinating thing. Its the Biggest Online retailer in china, worth more than the biggest retailer in the world. That raises questions about valuation and i know you and don some work to come up with valuation metrics. What have you concluded . I look at the growth rate so investors are imagining a growth rate and will look at this as a Technology Stock and ascribed to it the hope that the future will get better and get here soon. Rateyou look at the growth of this company, the growth has been meaningfully slowing down in terms of profits. It was down to Single Digits until the quarter they reported during the filing process. There have been a lot of acquisitions during this time so we can imagine that acquisitions have helped them ad revenues and profits. Maybe that will continue for some time. Valuation, the higher the expectations for growth would have to be. Youre looking at a company i am looking at the model when you look at the pedestrian valuation of the initial price, it was only at 60 times its operating profit. Now that were looking at 93, now youre talking about 54 times in operating profit. Ebay, and amazon, you look at salesforce and companies that have fantastic operating Profit Growth and fantastic Revenue Growth, no profits of course. At salesforce. A company with more expectations eight intuit. Baked into it. Does the valuation of 54 times give you pause . Sure. [laughter] but investors are going to love the growth. There is a lot more to come. Over the next in year or so. It will settle into an acceptable range, i imagine. But people want the stock. I want to bring in one more voice, a man who cannot wait to add alibaba shares to his offerings, brendan ahearn, managing director of crane shares that offers china focused etfs. As we watch these indications take up and this could clear above 100, are you still interested . Very much so. We believe not only in the company which is very established over 15 years ago. It is growing tremendously. Find levels of growth in a largecap company anywhere else in the world. We also believe there are macro tailwinds taking place in china that support. Only 45 of the chinese population uses the internet today. Continued urbanization where hundreds of millions of more people will be moving into cities and the rise of domestic consumption and in china, you would not know the big box retailer because you know the amazon model exists so they are leapfrogging and amazon has been so successful in building businesses and the crossers of where chinese consumers have been. Ma says hehen jack will go international, we believe mobile. They have been able to grow it from 12 to 32 . Online to offline trend is another big one. There is a lot of big expectations and the company but we think the company can fill those. Not everyone is in agreement. One nyu professor says what do you make of that . We believe in a basket approach that we will on alibaba where today we own tencent and baidu. We like the basket approach. It diversifies the single stock risk in the individual names are highly volatile and i agree, there are pros and cons to every investment. Within a Company Invested in china, you have to realize there are corporate governance. Aroundmper fidelis jack ma. Is there a point where you say this costs too much . I think investors will decide that. You are investor. We are a passive investment vehicle. In 11l add alibaba trading days from today which is a fasttrack. No matter what the price is . No matter what the price. You could not have bought it as part of the ipo if you wanted to. As an Exchange Traded fund, you need to access the underlying securities. As much as we wanted to i have been carrying this around for the last 1. 5 years to tell investors that you have to get ready for this company. The biggest ipo potentially ever is coming out of china. Whats amazing to me is that the number of passive investment vehicles that will never hold alibaba by listing in the United States, alibaba does not fall into the definition of china as a country because it is not listed in hong kong. Country fund becomes part of emerging markets and part of the global indices. No alibaba so the vast majority of passive investors, then its a chinese domiciled company and no u. S. Technology index. They list in new york and not nasdaq. Its also Cayman Islands domiciled company so the number of etfs that will ever hold alibaba gets real small real fast. Not only will we be one of the owners but we will be one of the fastest owners. I think we will see the first trade any second now. Given that so few etfs truly have correlation, does the correlation trade carry less weight . Do the funds have to hold their nose and own it . The people that will own alibaba will be the active managers. They participate in the ipo and are able to participate in the secondary. The passive investors will only be able to add alibaba at the rebalance. Fasttrack include a so we will hold quickly. Ofsome degree, the names trades in the u. S. Have abated to the nasdaq. You lose a little of that International Diversification but we still like the story coming ofu have sales net Income Growth across the board in this basket versus their u. S. Equipment. U. S. Equivalent. Are etfs a good way into chinese stocks . Sure, if thats it you want to buy. You own all these other chinese companies. Not all of them have some sort that aref government influencing them. About 80 of the market cap with them kweb are u. S. Listed names. In order to listen the u. S. , they have to apply through this ads structure which is not adr and has and as part of the doing business. They are not listing on shanghai. It is not on the asian markets. In order to get on a Global Investment base, they have to incorporate the structure which is convoluted and is a risk and thats where we believe this is part of a broader portfolio. Is it disappointing at all who can get involved in the ipo . They could get in a the 68 price. When this thing breaks, we will see huge volume today. They are going to trade into the hands of individual investors or small guys were very interested in this company and did not have a chance to participate. They will buy the stock at a 90 price or maybe more. What does this say about the system . Its an auction. Price inefficiencies where the briar debt buyer and seller are involved so if you dont like it, buy it dont buy it. These are institutions that have billions of dollars it will make a tidy profit. The allocation went to 25 funds. Thats riskier. Way riskier. Softbank got in in 2000 and returning 20 million into 65 plus billion dollars. I think its a gazillion. Its the greatest trade ever. Ultimately, its an auction. We might not like the price but ultimately, thats how the market operates. Sit tight for a moment because we want to take everyone back to the floor of the New York Stock Exchange. Alibaba could open for trading any moment. Describe to us the scene. Everyone breath here is on pins and needles. We need to see exactly where the stock opens because it keeps going higher and higher. The range has narrowed to one dollar. Thats a good sign and an open soon and the president of the new york such Stock Exchange that told you about 2030 minutes, 2030 minutes ago so we could see a Price Movement sometime soon. It feels like it will be very soon. Can you see what Goldman Sachs and barclays are doing right now . Or has it gotten so crowded around the alabama posts with everyone waiting to see the first trade that its difficult to know exactly whats going on behind the scenes and whats holding it up . Everyone is hovering around that post. I was on the other side and had a good idea of where they were looking. They are taking the orders and from all over the world to see exactly what the supply is an matching it with the demand. Although there is a lot of people trying to figure out the price, a lot of it is still algorithmic. They are trying to figure out where the supply meets the demand. Right now, no one back there had any idea of when it would open. It still depends on the order flow. From those you speak to on the floor, and who you get a sense the talk is 9190 three dollars has anyone told you where they really think it will clear . The people who i was talking to behind the scenes were the people who were working on the deal. They did not expect 93 per share right now. It very much exceeds their expectations were the stock would open. They were thinking early in the at to be close to 85 or 80 the low ends of 93 is very surprising to many people who had worked on this deal for months and months and were involved in pricing be 68 and it looks like it will open thank you so much. We hear the noise but we dont see the price. It feels as though it could happen any second. Its getting close. Its definitely getting close. I have been here before for that noise. That means something is taking. Hopefully, it will come out very soon. Thank you. When we talk about the best trade ever whether its yahoo investing in alibaba or softbank, lets talk about the flippers under profit. What they could be making in the 320 million shares is 7. 7 billion dollars. People who bought this deal yesterday who can flip it today. When you talk about softbank in a longterm relationship and putting that out there, thats an actual investment. This is a super successful lottery ticket. Its a way of saying its a company left out on the table. Dont you love capitalism . I happen to. Not make you ask the question is the system set up correctly . There is no other way to do it. Really . The nasdaq try to do electronically and it did not work. The thing about the filing is that the insiders are not participating. Sellingde management is a minimal amount of shares. Softbank is selling no shares and yahoo is selling 20 . Many of the private equity funds and hedge funds that were early adopters are selling very small fractions. The people who know this dumping the best are not actually participating on the ipo. Not participating in selling. Exactly. Of those who are insiders will be locked up for months. Theres a small number apparently of insiders who can sell and we learned that over the last couple of days. All of the other insiders beaver and former him even in even former employees could not sell more than 20 of their holdings. They can only sell 14 of the shares in the ipo. All the people who know this company the best are sticking with it which shows the longterm growth projection. What is it about this deal that is causing people to get so excited . Its a new drug. Its like the discovery of gold. People know internet appraiser the big money makers of the modern economy and those people do not realize the chinese internet was is important as it is until recently. How did the training Trading Community make money . Momentum. Remember when the facebook deal came through and people said i will open up a stock account for my motherinlaw. Tom farley said his dad is watching. Do people really know what the company does . No, its a beautiful and dramatic set up and people buy into it and its how wall street interactions work. Arent you surprised there is so much energy that is going to the so quickly . Why did they need to carry this around for two years . We have been banging on doors for the last one point five years to tell the story as difficult because of the focus on the liabilities on the chinese balance sheet. We want to provide a balance perspective. Wentin march, jd. Com public. It has been a very successful thing. It almost primed the pump for this frenzy. They are selling 320 million shares which is a lot of shares. Theyre only selling 15 of the aggregate company. The company will be valued at over 200 billion. The number of shares available in the market is small and thats part of what i think has driven this. It creates excitement. Prices, anybody want to get their hands on it, will have to bid the stock up even further. We talk about the facebook but, guess what, if you want the guy or woman who flip to that day and held on, you look like the smartest dog in the yard. Sure, if you bought facebook at 22. It was those people who wanted to sue Morgan Stanley saying i was wrong. They said it was unfair. If you did not flip, you are the fact that today. Cory johnson, we mentioned that yahoo is barely trading up even though alibaba is set to open a 93. What do you interview that to . Yahoo s think about the tied to the anchor of alibaba. Fair forys its not the ali pay. They decide to sell 40 million shares into this offering and they are tied to pick a mystical number of 68 when the market is clearly comfortable with a much higher price. Whilet benefits that may benefit the stock over yahoo is stuck with a lot less money than they would have had if they had gone for a maximum price the way that facebook did. Everybody knows that alibaba will open in the 90s. That seems fairly clear right now. Yahoo is stuck at 43. Believer, an alibaba why not by yahoo right now . Thats a reasonable question. Event that a lot of yahoo believers or shareholders have been waiting to get out. As soon as the alibaba cash flows in, they recognize that as the event there waiting for. Look at the guy who stayed in. Son has an 80 keger on his annual growth rate over 14 years on that investment. Is and it also to be critical of exactly where the final decision comes from where these deals price . Its not a science and even though we say in retrospect, facebook squeeze every last dollar out. It was a disaster that day but it was not a disaster for weeks later. Im not saying its easy but maybe its an art but theyre ugly paintings out there. Prices seen really bad with ipo price is too high and too low. In the case of yahoo , it is this narrative. This is not the one time that alibaba has taken money out of yahoo s pocket. It happens over and over again. There is also some really valuable ugly art. I think alibaba made the decision and there was a committee that included yahoo and softbank. I believe that alibaba made the entire decision by themselves of the bankers and they want it to pop. Is happy that is a 25 bump or whatever the amount is. We will be talking about this tomorrow. The price will march on. Facebook at such a wide audience of users in the u. S. No one is using alibabas platform in the u. S. For the most part and thats why im not surprised this was institutionally sold. Half the book that taken down by 10 firms . This was institutionally sold. Do you remember what a hot mess that facebook book was . You had grandmas and aunts and uncles and friends putting into the deal. Thats not the case here. Very, they have made it institutional and allows them to control the process. Its 10 minutes to noon and we still not have seen a trade. That does not mean anything is gone wrong but it is curious. Tom farley, the president of the near Stock Exchange was on with us about 50 minutes ago thinking that we could see this in 20 minutes or 30 minutes. He qualified it and he said or it could be one hour. We have to get this right. Im surprised they have jack ma down at the post. Isnt that the indication that the inns are going . Maybe he just wanted to be there. If i was jack, i would want to be there the whole day. I would want to make sure that everybody involved in this process, the New York Stock Exchange, the barclays, the Market Makers, the Goldman Sacks are getting this right. Exactly, too big to fail. Son, why does he make the trip . Now at 93 would be worth 74 billion. Thats a fairly great moment to celebrate anywhere. Has anybody checked on the softbank stock price . It close in tokyo. I guess there is an adr but is not trading up a whole lot. Called butwhat its there is somebody in there which is 2. 8 million shares. Has exceeded its average its trading average for the last few days. There is all this anticipation leading up to the first trade of alibaba. Softbank shares are up 30 since the end of july so the stock came running into this. Ofmight also be a reaction them not going after t mobile. What is the next alibaba . One of the interesting pressnies is called sf ex which is a delivery company, private company and there has been some Venture Capital around it. We mentioned alibaba delivered 6 million packages last year 6 billion packages last year as opposed to ups which delivered 4. 4 billion packages. They dont know any inventory like amazon. They run the logistics. There is a lot of movement around who these freight and logistics operators who are benefiting from all of the deliveries being generated. There are a few Interesting Companies and that is nice and some private Equity Movement there as well. They are riding on the back of alibaba. Exactly and they are doing all of the deliveries. Is there an amount of time you would start to look at this and say this is taking too long . Leslie picker is down on the floor and confirm this is the longest amount of time in history we have seen here we go. Looks likend that where alibaba opened up. That is a big number. [applause] the sound of money being made on the floor of the New York Stock Exchange. Opened justibaba about where we thought it would. . 95. Ned at 92 its more than i25 dollar pop off the ipo price. This is a new era of ipos. Back years ago, you are seeing the arms flailing, all the arms in the air are guys videotaping with phones and ipads. Alkyl s why the thats why the apple market cap as high as of all. If its true. Apple trades at more than 6 billion but this company which we thought was only worth 168 billion and that was amazing is billion, more than Jpmorgan Chase and almost as much a chevron. Does that make you scratch your head more than Jpmorgan Chase . Does that make you feel like welcome back to 1999 . Economygan is the old but we will not be banking like that in 10 years. Alibaba is the new economy and the size which is a Global Company. The chinese have arrived. This is a momentous moment so im glad to be part of this history. Watch out. We are too complacent in the United States. Alibaba could be huge. That could hurt jpmorgan. Leslie picker is on the floor in the midst of the action at the New York Stock Exchange. A big smile is on your face what must be fun to be there. Coming up on what an historic day. You saw the cheering behind me. The crowds arewooing all day. It might be bigger than when they rang the opening bell. No one expected the 93 open. That is pretty incredible. You may not be able to see behind you but the stock is heading higher. It is not hit 100 yet but it cleared 96. The stock is worth 235 billion. I should tell you that in the few short minutes that alibaba has been trading, more than 72 million shares of change chance of there is serious volume. This is likely to be the most volume this company will ever see traded. Its amazing that it has gotten to this level. Thats higher than any analyst we surveyed predicted this company would be worth after its ipo. The high end of that prediction was 240 billion. We are looking at 235 billion so that is above what most people expected to see today. We will come back to you in one second. Alibaba just started treading with an opening trade of 92 . 97. We are now at 96. Its trading so fast i cant catch up. I know youve got to run i have to see if jack ma;s is free for lunch. We will continue here. Not only can i not catch the price that i apologize for not getting your names right. This is a moment in history. Im glad i got to be a part of this. I will see you on monday. I will see you guys. We continue the conversation 97. 49 it will be at 250 billion stock minutes from now. Its amazing. Justified that this Company Still has a lot of upward momentum. Going back to the fundamentals, the point that only 45 of the chinese citizens are even on the internet and almost everyone in china who gets on the internet ends up buying stuff on alibaba. That is a lot of upward opportunity. As the economy in china grows and you go to a consumer mode take a look at this on screen. Worth 19 billion. He is the man who had the dream. He came from nothing and was an english teacher. He had nothing and had a vision and made it happen. This is a great entrepreneurial story. Every young person should aspire to be someone like jack ma. That is so true. This is someone who is projected to be the start manager at a Kentucky Fried Chicken in china. Rejectedh that he was for that job and all of the things he has done all the partners and employees of alibaba, its a great moment. Who wouldve thought the largest ipo ever in the United States would be coming out of china . This is true. If the underwriters exercise their open up option, it will, without any shadow of the doubt, be the largest ipo in history. We are almost at 100, 99. 49 as i speed. That is the high we have seen thus far but a contender to go for higher. Billion dollar stock in minutes. I look at the valuations. Its not cheap anymore. 92. 70 for the first trade and now it is trading at 25 times sales. Its a company with a price to earnings ratio of 46 times earnings. Operating earnings is probably the most relevant number. Earningsits operating for the trailing year. The business is material slowing down. Profits grow at 20 and the range was 54 times the operating profit. The market is clearly hoping that as people get on the phones in china, they will shop at alibaba and be the beneficiary of that. Thats a great hope of this offering. You can imagine what might happen internationally and imagine improvements in margins that we dont see. When other biggest focusing greatest successes selling tronic and china as more people adapt to the internet for the first time and thats the great believe that investors are taking right here, and right now. Cory johnson is the voice of reason on the west coast. Day one ipo, you get this frenzy. I think its important that so many institutional players are clearly longterm buy and hold, and theres that element of speculation. 242 billion. After hitting 99 . 50, the stock has