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Is Alibaba Pictures Worth $10 billion ?

08 Jun

Is Alibaba Pictures Worth $10 billion

 

Alibaba Pictures is sitting on $10 Billion worth and has announced more share selling, even before it has earned.

Latest Alibaba news is regarding the question that might arise, whether Alibaba is worth $10 billion?  It’s been merely 12 months that the entertainment arm of the Chinese e-commerce giant began their operations and even before the company released a single movie; the Group has seen its shares that are publicly traded climbed beyond seven fold in order to reach $9.6 billion market cap when it comes to stock exchange of Hong Kong.

The company has been majorly owned by Jack Ma, the founder of Chinese e-commerce giant and also the billionaire who is famous and known for the driving up the stock price by certain moves that are too flashy, such as Zhang Qiang being hired as CEO and also the heavy $400 million investment that his friend cum actress Zhao Wei has invested in the Group.

Jack Ma is considered to be the film and entertainment industry novice and has entered the business back in June last year when it acquired the stake in ChinaVision, a rather money losing operation it was. The stake it acquired was of 61 percent and it was for $10.4 billion HK which is approximately US $1.3 billion.

In the next 12 months of stake acquisition, Jack Ma has generated $8 billion in the market cap in addition to the original mainly just on his name as a shrewd entrepreneur and also the perceptions that the market has regarding his $200+ billion empire and how much the companies can take advantage of it. Alibaba news had reported that it had been planning to incorporate its online movie ticketing system in the film unit.

However, with handful of films in the future pipeline and no earnings, the stock of this unit is priced entirely on the future speculations that might change the company and turn it into the biggest entertainment unit which is Hong Kong based. The momentum of the share price and also the ballooning market cap has put a lot of pressure on the Alibaba Pictures Company and its executives to deliver something. One of the sources close to the company said that the story development and production staff of the company is looking for the ideas and projects that shall justify the lofty valuation that has happened for it.

In addition to this pressure, the last week’s announcement regarding the company selling the $12.18Billion HK in shares for raising the funds in order for the potential acquisitions to happen is going to be challenging. If the entertainment unit of Alibaba has to make it to the most competitive entertainment industry then it has to produce some big blockbusters so these big numbers can be warranted.

 

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Posted by on June 8, 2015 in Ali Baba, Technology

 

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