Author: Aaron, Think AI
SpaceX is going public, stealing the spotlight and becoming the most talked-about topic in the market.
Not only because this IPO will become the largest in U.S. and global history.
Both its market capitalization at listing and the amount raised set historical records, with a valuation of $1.77 trillion and $75 billion raised—every figure striking a chord with the public.
Moreover, Musk's firm stance toward investment banks and his push to rewrite IPO rules have propelled this IPO to new heights.
This IPO reserves 30% of new shares for retail investors, far exceeding the typical 5-10% in U.S. IPOs, breaking institutional monopolies on high-quality assets.
Moreover, Musk reduced the overall underwriting fee for the investment bank to below 0.75%, lower than the typical rate of over 1% for large IPOs, setting a new low for mega-IPO fees.
Global capital is scrambling to secure allocations, with funds betting on the space narrative, fueling the most frenzied U.S. IPO market in decades. Previously, the record for the largest U.S. IPO fundraising was held by a Chinese company: Alibaba.
That was the era when Jack Ma said you couldn’t find a competitor even with a telescope—in 2014, it set the record for the largest fundraising in U.S. stock market history, a record only recently broken.
How did that globally renowned IPO happen? What has Alibaba been through 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 its first day of trading, Alibaba opened at $92.70, a surge of approximately 36% above the offering price, and closed at $93.89. With a final market capitalization of $230 billion, Alibaba surpassed Amazon and Facebook to become the fourth-largest technology company in the world.
Originally planned to raise $21.76 billion, due to overwhelming global demand, the underwriters exercised their over-allotment option, resulting in total fundraising exceeding $25.03 billion, topping the list of the world’s largest IPOs at the time.
At that time, Alibaba was a collection of Taobao, Tmall, Alipay, Cainiao, Alibaba Cloud, and China’s e-commerce infrastructure.
It represents a rapidly rising Chinese middle class, a continuously digitizing consumer market, and a China growth story that global investors have long envisioned but found difficult to directly invest in.
In a sense, Alibaba in 2014 was the company closest to a "gateway to the era" in the eyes of the capital market.
After Alibaba's listing, global investors realized that China could also produce world-class internet platforms and join the ranks of leading global tech companies—a profound influence that continues to this day. At the same time, it ushered in the golden age of Chinese depositary receipts, sparking a surge in IPOs by Chinese internet companies.
Conversely, it has also pushed Hong Kong's capital market to adapt and change.
Alibaba initially considered Hong Kong, but its partnership structure conflicted with the Hong Kong Stock Exchange’s “one share, one vote” rule at the time, leading Alibaba to ultimately list in the United States.
Several years later, the Hong Kong Stock Exchange reformed its listing rules to allow new economy companies with a dual-class share structure to list, enabling companies like Xiaomi and Meituan to go public, followed by Alibaba’s secondary listing in Hong Kong.
Thereafter, Alibaba’s e-commerce empire entered a golden period of expansion, reaching a market capitalization peak of $630 billion in October 2020. During this phase, Alibaba planted a quiet seed—a minor player at the time—that would later help Alibaba successfully transition as the AI era arrived.
From "either-or" to being overtaken in market cap by Pinduoduo
Just one month after Alibaba's market value reached the top, Ant Group's IPO was halted, abruptly ending its dream of going public with a trillion-dollar valuation. This marked the beginning of Alibaba's decline from its peak.
In 2021, Alibaba was fined 18.228 billion yuan for monopolistic "choose one of two" practices on its platform, setting a record for the largest antitrust penalty in China.
The substantial fine was imposed because, since before 2015, Alibaba abused its dominant market position by requiring merchants on its platform to list only on Alibaba’s platform or participate in its promotional activities, severely harming merchants' rights and constituting monopolistic behavior.
In December 2023, it was later ordered to pay JD.com 1 billion yuan to resolve a decade-long "exclusive choice" dispute.
During this period, Alibaba was plagued by corporate bloat, with rampant formalism and bureaucracy, innovation having become rare. The high-profile sexual assault case involving a female employee sparked nationwide public outcry, leading to the resignation of several senior executives. CEO Zhang Yong issued a public apology, and Alibaba’s values system came under serious scrutiny.
A series of strategic misjudgments during its expansion have not only cost Alibaba hundreds of billions but also eroded its core e-commerce moat. Alibaba bet on consumption upgrading, causing Taobao to lose its association with “affordability,” allowing Pinduoduo to capture the market. Taobao and Tmall’s market share plummeted from 66% in 2019 to around 30% today.
After proposing the new retail strategy in 2016, the company invested hundreds of billions in an attempt to integrate online and offline channels, investing in or acquiring companies such as Intime, Suning.com, and Sun Art Retail—all of which resulted in massive losses, missing the golden era of short-form video and live-streaming e-commerce.
The large-scale entertainment sector has lost 60 billion yuan over eight years, with its industry standing continuously declining. After acquiring Youku, it dropped from the top position to fourth, being fully surpassed by Tencent Video and iQiyi. Xiami Music shut down in 2021. Operating the creative industry with a technology and capital mindset, it lacks a core content DNA.
Local life services continue to be pressured by Meituan. Then, at the end of November 2023, Pinduoduo’s market capitalization surpassed Alibaba’s for the first time. Jack Ma responded internally on Alibaba’s intranet, saying, “Alibaba will change, Alibaba will transform,” and added, “The era of AI-powered e-commerce has just begun.”
Alibaba faces its darkest hour, and AI has become its new remedy.
Strategizing for the AI Era
Currently, Alibaba has a strong presence in the AI field, with the Qwen model reaching a peak monthly active users of 300 million on the consumer side; Alibaba Cloud's total revenue for Q1 reached RMB 41.6 billion, a 38% year-over-year growth, with AI-related product revenue accounting for 30%.
Alibaba Cloud has consistently ranked first in China's public cloud IaaS market share for multiple years, serving as the core infrastructure for AI development in China.
We have invested in self-developed chips for AI training, and large models are now integrated into ecosystems such as Taobao, Alipay, Amap, and Feishu, accelerating commercialization. However, challenges remain significant.
C-end users are still dominated by ByteDance; Doubao’s monthly active users far exceed Qwen’s, with higher user retention. After the Spring Festival campaign, Qwen’s active users declined to around 150 million.
The departure of Tongyi Qianwen’s head, Lin Jinyang, has caused team instability, intensifying competition for top AI talent and reducing Alibaba’s appeal; Alibaba is torn between focusing on AI traffic entry points (C-end users) and AI industry networks (B-end services), failing to establish a clear differentiated positioning and exhibiting inconsistent technical direction.
Looking back at Alibaba's rise and fall since its listing twelve years ago, one can clearly see the inevitable fate of a giant.
In 2014, the capital market assigned Alibaba an exceptionally high valuation, betting on the era of China's consumer internet.
Subsequent years of setbacks stemmed from reckless strategic diversification, slow decision-making due to corporate bloat, and a failure to recognize the significance of emerging sectors.
Ultimately, it was AI that drove the recovery, reaffirming that core technology is the fundamental strength enabling tech companies to navigate economic cycles.