Against my better sensibilities, I finally took a peek at the Alibaba registration statement for its IPO.   I can’t believe this thing was floated in the U.S. market. It’s now the poster child example of how corrupt and controlled by the bankers our entire system is. Any professional money managers/fund managers who bought this stock for anything more than a quick flip should be strung up from an oak tree by the neck for breach of fiduciary duty.


The IPO raised $21.8 billion dollars and paid the bankers involved $300 million.  This capital raise is essentially a blind pool which can used for anything.  The prospectus says, “proceeds to be used for general corporate purposes.”  Hmmm…just how well do the new owners of this stock know the founder and Executive Chairman?  The “Risks” section was an astonishing 43 1/2 pages.  The entire prospectus not including exhibits was 435 pages.  There’s no way in hell any financial analyst anywhere has read it in its entirety.  I doubt any one lawyer or accountant has either.

In the context that Chinese corporate accounting is notoriously corrupt, BABA had $8.4 billion in revenues in its Fiscal Year 2014, which ended on March 31.  It reported $3.7 billion of net income.   The stock market values BABA at 24x revenues and 61x net income.  The company also has $8 billion in long term debt, something which has not been openly mentioned.  It has no assets other than rapidly depreciating computer software and $6 billion of “intangibles.”  Because of the way in which BABA is legally structured, the shareholders do not have any legal ownership claims on the subsidiaries that generate revenue.

It is completely inconceivable that the SEC would have approved this stock for issue in the U.S. market 20 years ago. That the SEC put it’s meaningless “It’s okay to sell this stock to retarded U.S. investors” stamp tells us the degree to which our financial and legal system has become engulfed by the corruption and criminality of Wall Street banks.

BABA is the kind stock market nuclear waste that boiler room penny stock operators like Stratton Oakmont would stuff down the throats of helpless senior citizens and greed-crazed morons.  It’s not the kind of garbage that, historically, any large Wall Street investment bank would have touched with a ten-foot pole.  Although I can understand JP Morgan and Citi having no qualms about to selling BABA to anyone who picks up the phone call from their broker at those two firms, the fact that Goldman Sachs, Morgan Stanley and Credit Suisse were willing to sell this sewage to the public (historically these 3 firms left the boiler room rot to the sleazy penny stock firms in Long Island, South Florida, Denver and Salt Lake City and focused on real crime) tells us just how unethical and corrupted Wall Street has become.




17 thoughts on “ALIBABA.CON

  1. Dave, you are way too negative. You should have more trust in Alibaba’s CEO. All the problems you think about he already thought about years ago. Nothing to worry about.

  2. Shows how far down the road to ruin Wall St. and Washington have gone. Maybe I am too old school but back in my time, 60s-early 70s, no respectable firm would have had anything to do with a piece of garbage like this.

    Thanks for posting.


  3. LOL, It’s okay to sell this stock to retarded U.S. investors hits the nail on the head. No one knows anything about this company and have bought on the hype while Cramer has been pumping this stock last few month.

    This company is seriously nobody, I actually used this site earlier this year to purchase a statue and my overall experience using the site blows chunks compared to eBay. The new is boasting BaBa allows you to purchase direct from manufacturer. People with half a brain should know these so called Asian manufacturer’s are sweat shops using 12 to 14yo children and some even young as 8yo.

    I saw complaints the other week before the IPO about how BABA has a lot of illegal fake copyrights selling on their site that conflict with U.S. Copyright laws. BaBa is communism in the purest form.

  4. The system is at peak greed and lawless racketeering.

    Im just trying to hang on with my mining shares and physical. It is all bullshit.

  5. Just to wRAP this up:

    If you don’t know Jack,
    I present to you,
    Jack Ma, from Ali Baba.

    He’s Ma’ man, Jack!
    Who’s gonna Jack you’all suckas!

    Cuz you wanna be like,
    Da 40 thieves who wanna steal,
    from Ali Baba!

  6. Success breeds competition, I’d guess Baba will be dead in the water in a couple of years. Ma will probably then turn investor with his huge stash of cash like Yahoo, who’s core business is essentially worthless.

  7. Amen. Right on. Those that claim you’re too negative can’t appreciate the fact that you were being polite. Would love to see the internal emails, but that’ll never happen. Not after the mortgage bond fiasco. Bet the run email cleaners every night. One last comment: As always, the only way to win is not to play. Keep up the good work; it’s appreciated to know that other folks thinking the same way exists.

  8. Its a shame that big money will buy this junky, debt-ridden, over-valued monster, foreign-owned company , and then stick it in the “safe” 401k plans and pension plans across the USA, and stick the risk in Americans pocket, all the while big money takes their commish to the bank with no risk at all… shame on you big MM managers..

    1. An even bigger shame is that big mutual funds are over-weighted in the homebuilder sector. Anyone get a peek at “pending home sales” today. Oops…

  9. I thought I’d interject a little more “real” experience.
    What Alibaba started out as was as the web portal of choice for Chinese firms to go direct to foreign resellers. This is their primary business – not the consumer.
    In the past, an interested foreign company would send a representative to China who would then have to navigate the myriad unfamiliar regulatory, financial, social, and other environments.
    The same could be said for a Chinese manufacturer seeking to sell in a foreign country.
    Alibaba has now taken over much of this role for the small and medium sized exporters in China. I don’t know if they also facilitate the actual financial transfers, but this would be a logical extension.
    Of course, Alibaba as an IPO is more than just what I describe above – which was their core business. Now there’s games, there’s the internal Chinese market etc.
    I absolutely agree that the multiple is breathtaking, but to ascribe all of Alibaba as a con is not correct. It may well be that much of it is – but even the worst con always has a seed of value in it.

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