(Adds trading ticker symbol in paragraph one)
By Tanya Agrawal
May 22 Shares of Chinese e-commerce firm JD.com
Inc soared almost 20 percent in their U.S. market debut
as investors sought a piece of the country's booming online
retail market, auguring well for Alibaba Group Holding Inc's
hotly anticipated mega-float later this year.
JD.com, China's largest e-commerce company after larger
rival Alibaba, was briefly valued at more than $30 billion
before the stock pared its gains. By midday, the stock was up
about 8 percent at $20.50, versus its $19 initial public
While JD.com's IPO is the biggest yet by a Chinese company
in the United States, the offering is widely expected to be
dwarfed later this year when Alibaba launches what some believe
will be the biggest IPO by a tech company in history.
"The momentum seems to be moving in the right direction for
Alibaba," said Rett Wallace, chief executive of Triton Research,
which analyzes startup companies.
Wall Street's appetite for Chinese technology stocks
recovered in 2013 after a series of accounting scandals in 2011
resulted in a sharp fall in listings.
Until JD.com's IPO, seven Chinese companies had gone public
in the United States this year, raising $1.21 billion. In all of
2013, eight Chinese companies raised about $884 million.
Chief Executive Officer Richard Liu said in a Thursday
interview that the company was keeping a lookout for acquisition
opportunities in the e-commerce space and focused on expanding
in its booming home market.
JD.com, which has never made a profit, is often compared to
Amazon.com, which sells directly to consumers, while
Alibaba is often likened to eBay Inc, which mainly
facilitates sales between members.
China's business to consumer e-commerce sales may surpass
$180 billion this year due to rising Internet usage, expanding
middle-class incomes and improving distribution networks, New
York-based market research firm eMarketer estimates.
JD.com had an 18.3 percent share of that market as of the
third quarter of 2013, according to Beijing-based iResearch. It
claims some 30 million-plus active customers and saw net revenue
jump 70 percent to $8 billion in 2013's first nine months.
But it still operates in the shadow of Alibaba, which
commands an 80 percent share of an e-commerce market.
The company posted a loss of $8 million in 2013 and warned
that it "may incur net losses for some time in the future" as it
invests in warehouses and delivery vehicles.
JD.com's founder and CEO, Liu, retains control of almost 84
percent of the voting power in the company. He was awarded a
one-off share-based bonus worth $891 million at the IPO price,
raising questions about governance and shareholders' rights.
On Thursday, Liu said the company's investors, which include
Tiger Global, Saudi billionaire Prince Alwaleed bin Talal's
Kingdom Holding Co and Hillhouse Capital, backed that
one-time award given JD.com's decade-long ascent.
(Reporting by Tanya Agrawal in Bangalore; Editing by Ted Kerr
and Tom Brown)