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Alibaba growth surges ahead of IPO; Stocks flat

Wednesday, August 27, 2014 - 02:20

Summary: Alibaba sales roar 46 percent ahead of highly anticipated stock market debut; Tiffany gains on demand for lower-priced jewelry; Falling rifle sales hurt Smith and Wesson; Wall Street was little changed after records. Conway G. Gittens reports.

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Alibaba is expected to launch the biggest tech IPO as early as next month. Ahead of that - new numbers. Quarterly sales at the world's biggest online marketplace surged 46 percent. Monthly active buyers by the end of June - 50 percent more than the same time the year before. Net income nearly tripled to just under $2 billion. Compare that to Amazon, which saw a net loss of $126 million in the June ending quarter. The two will go head-to-head for investor attention once the stock goes public, each having competitive strengths and weaknesses, says Max Wolff of Manhattan Venture Partners: SOUNDBITE: MAX WOLFF, CHIEF ECONOMIST, MANHATTAN VENTURE PARTNERS (ENGLISH) SAYING: "Alibaba is a game where you are betting on the future of Chinese e-commerce, which is pretty exciting because you still have about 700 million people who are functionally not online yet in China. So it is not as a mature a market. Also, the mobile revolution is even faster and even more exciting than here in the U.S. So obviously the growth market for Alibaba is much larger than Amazon. However, Alibaba is still a Chinese story. Amazon is doing some interesting things in India. Amazon is much more global and it has a different model. So it is a much less profitable model and that's a problem but it has more stickiness." Amazon shares up for the day but down roughly 14 percent for the year on profit concerns. Yahoo, which owns about a quarter of Alibaba, moved higher. Tiffany boosted full-year guidance for the second time thanks to demand for lower priced, higher margin jewelry in the Americas and Asia. Investors are rewarding shares of Tiffany with a one percent gain. Different story for gun makers Smith & Wesson and Sturm Ruger. Smith & Wesson missed sales forecasts and guided current sales estimates lower. Demand for long guns and rifles are down sharply. As for the broader market, stocks were little changed but the S&P 500 was up enough for another record close above 2,000. The pace of home price sales gains has been slowing in recent months, but economists polled by Reuters are more upbeat about the housing market overall than they were earlier this year. A stronger labor market is likely to offset an expected gradual rise in interest rates and lead to higher home resales over the next two years. European shares were little changed but remain near a one-month high.

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Alibaba growth surges ahead of IPO; Stocks flat

Wednesday, August 27, 2014 - 02:20