SpaceX’s hot IPO; the last record was set by a Chinese company

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Author: Aaron, Think AI

SpaceX is going public, quickly capturing market enthusiasm and becoming the hottest topic.

Not only because this IPO will be the largest in U.S. and global history.

Both market value and fundraising amount set new records, with a valuation of $1.77 trillion and a fundraising of $75 billion, each number stimulating public nerves.

Even more so because Musk has taken a tough stance against investment banks, rewriting IPO rules, pushing this IPO to a climax.

This IPO reserves 30% of new shares for retail investors, far exceeding the usual 5-10% in U.S. IPOs, breaking the monopoly of institutions on high-quality assets.

Moreover, Musk has pushed the overall underwriting fee rate below 0.75%, lower than the usual 1% for large IPOs, setting a new low for mega IPO fees.

Global capital is rushing to reserve quotas, betting heavily on space narratives, creating the most feverish U.S. stock IPO market in decades. Previously, the record for U.S. IPO fundraising was held by a Chinese company, Alibaba.

That was during the era when Jack Ma said even with binoculars, no rival could be found, creating the largest U.S. IPO fundraising record in 2014, which stood until today.

How did that globally sensational IPO happen? What has Alibaba experienced over the past decade?

A feast from over a decade ago

On September 19, 2014, Alibaba officially listed on the New York Stock Exchange.

The offering price was set at the upper limit of the range at $68. On the first day of trading, Alibaba opened at $92.70, a roughly 36% increase over the offering price, and closed at $93.89. The total market capitalization at close was $230 billion, surpassing Amazon and Facebook to become the fourth-largest tech company globally.

Originally planned to raise $21.76 billion, due to overwhelming global capital demand, underwriters exercised over-allotment options, and the total fundraising exceeded $25.03 billion, topping the global IPO fundraising chart at the time.

At that time, Alibaba was a combination of Taobao, Tmall, Alipay, Cainiao, Alibaba Cloud, and China's e-commerce infrastructure.

It represented a rapidly rising Chinese middle class, an increasingly online consumer market, and a Chinese growth story long imagined by global investors but difficult to buy directly.

In a sense, Alibaba in 2014 was the company closest to the "gateway of the era" in the eyes of the capital market.

Alibaba's listing made global investors realize that China could also have world-class internet platforms, entering the first tier of global tech companies, with a lasting influence to this day. It also ushered in the golden age of Chinese concept stocks, sparking a wave of Chinese internet companies going public.

Conversely, it also prompted changes in the Hong Kong capital market.

Alibaba initially considered Hong Kong, but its partnership system conflicted with the "one share, one vote" rule of the Hong Kong Stock Exchange at the time, so Alibaba chose to list in the U.S.

A few years later, the Hong Kong Stock Exchange reformed its listing system, allowing companies with dual-class share structures to list. Xiaomi, Meituan, and others listed, and Alibaba later secondary-listed in Hong Kong.

Subsequently, Alibaba's e-commerce empire entered a golden expansion period, reaching a peak market value of $630 billion in October 2020. During that phase, Alibaba planted a hidden seed, not yet the main player, which helped Alibaba successfully transform during the AI era.

From "dual-one" to being surpassed by Pinduoduo in market value

Just one month after Alibaba's market cap peaked, Ant Group's IPO was halted, abruptly ending the dream of a trillion-dollar valuation in finance. This marked the beginning of Alibaba's decline from prosperity.

In 2021, Alibaba was fined 17.7k yuan for platform "dual-one" monopoly, setting a record for anti-monopoly penalties in China.

The hefty fine was due to Alibaba abusing its dominant market position before 2015, requiring merchants on its platform to only open stores or participate in promotions on Alibaba, severely damaging merchant rights and constituting monopolistic behavior.

Later, in December 2023, Alibaba was ordered to pay JD.com 1 billion yuan, settling a 10-year dispute over "dual-one."

During this period, Alibaba's corporate illness worsened. Formalism and bureaucracy became prevalent, innovation was scarce, and a sexual assault incident involving female employees caused nationwide outrage. Several senior executives resigned, CEO Daniel Zhang publicly apologized, and Alibaba's value system was seriously questioned.

Moreover, strategic misjudgments during its expansion caused Alibaba to lose not only hundreds of billions but also its core e-commerce moat. Alibaba bet on consumption upgrading, but lost the "cheap" perception of Taobao, with market share dropping from 66% in 2019 to about 30% today.

After 16 years, it proposed a new retail strategy, investing hundreds of billions to connect online and offline, acquiring or investing in Intime, Gome Retail, Suning.com, etc., all resulting in heavy losses, during the golden period of short videos and live-streaming e-commerce.

The entertainment sector lost 60 billion yuan over 8 years, with industry standing continuously declining. After acquiring Youku, Alibaba fell from industry leader to fourth place, overtaken by Tencent Video and iQiyi. Xiami Music shut down after 21 years. Operating the creative industry with technology and capital, it lacked content DNA.

Local life services continued to be suppressed by Meituan. Then, at the end of November 2023, Pinduoduo's market value surpassed Alibaba for the first time. Jack Ma responded internally that "Alibaba will change, Alibaba will reform," and mentioned that "the AI e-commerce era has just begun."

Alibaba faced its darkest hour, with AI becoming its new remedy.

AI Era Layout

Currently, Alibaba has a strong presence in AI. The Tongyi Qianwen model's monthly active users on the consumer side reached 300 million, and Alibaba Cloud's Q1 revenue hit 41.6 billion yuan, up 38% year-over-year, with AI-related product revenue accounting for 30%.

Alibaba Cloud has maintained the top share in China's public cloud IaaS for several years, becoming the core infrastructure for AI development in China.

Self-developed chips are used for AI training, and large models are now embedded into Taobao, Alipay, Gaode, Feishu, and other ecosystems, accelerating commercialization. But challenges remain obvious.

The consumer side is still dominated by ByteDance, with Doubao's monthly active users far exceeding Tongyi Qianwen, and user stickiness is higher. After the Spring Festival activities, the active users of Tongyi Qianwen dropped to about 150 million.

The departure of Lin Junyang, head of Tongyi Qianwen, caused team turbulence, and competition for top AI talent intensified, reducing Alibaba's attractiveness; Alibaba is oscillating between AI traffic entry points (C-end users) and AI industry networks (ToB services), failing to form a clear differentiated positioning, with wavering technical routes.

Looking back at Alibaba's twelve-year rise and fall, the growth destiny of giants is clearly visible.

In 2014, the capital market gave Alibaba an ultra-high valuation, betting on the era of China's consumer internet dividend;

Subsequent setbacks stemmed from blind diversification strategies, decision-making delays caused by corporate illness, and misjudging the times by underestimating emerging sectors;

Ultimately, relying on AI to revive, it again proves that hardcore technology is the underlying confidence for tech companies to survive cycles.