Alibaba (BABA) was originally characterized as China’s answer to Amazon (AMZN). Following its 澳洲幸运5官方开奖结果体彩网:initial public offering (IPO) on the New York Stock Exchange (NYSE) in September 2014, the online marketplace grew exponentially in both the products and services it offers and 澳洲幸运5官方开奖结果体彩网:the companies it owns.

Why would Alibaba, or any foreign company for that matter, choose to 澳洲幸运5官方开奖结果体彩网:go public on a U.S. exchange rather than one closer to home? While there may be numerou🦩s answers to this question, three possible motives stand out: control, reputation, and range of motion.

Control

Many believe that Alibaba's U.S. IPO allowed founder Jack Ma to maintain control of the company. Alibaba’s pre-IPO structure gave Ma and co-founder Joseph Tsai control of the company despite not owning a significant percentage of shares. Ma’s reported first choice of exchanges, Hong Kong, frowns on control methods that aren't based on majority ownership.

The NYSE and the U.S. generally allow companies to use 澳洲幸运5官方开奖结果体彩网:share classes to maintain control of publicly traded companies. Even with foreign companies that plan to hold a m🐻ajority 🌠of shares, the share class structure offers an opportunity to raise capital without giving away significant power to the new shareholders. 

Reputation

Not only is there an element of prestige in being an NYSE-listed company, but there is also a very practical advantage. Companies that trade publicly in the U.S. fall under the regulatory supervision of the 澳洲幸运5官方开奖结果体彩网:Securities and Exchange Commission (SEC).

Although this often means learning new processes and more paperwork for foreign companies making the leap, it pays off in the long run. The increased scrutiny and transparency SEC oversight provides is seen as a plus by investors, who subsequently have more trust when reading a company's financials and making their investments.

A company like Alibaba can use that trust to position itself even more clearly as Amazon's primary rival. The U.S. listing can make it easier for investors looking for exposure to online marketplaces to choose Alibaba’s growth story over Amazon’s. The NYSE itself states the benefits of their exchange include improved branding and visibility, access to capital, and increased liquidity opportunities.

Range of Motion

A U.S. listing also allows companies like Alibaba a bit more range of motion when it comes to 澳洲幸运5官方开奖结果体彩网:mergers and acquisitions (M&A). Having U.S. dollar shares on a U.S. exchange can simplify any future acquisitions of U.S. businesses and can lessen🦩 the scrutiny these deals might face if a foreign listed company ♈made an offer for a U.S. listed business.

The Bottom Line

There's plenty to be optimistic about regarding Alibaba. The company is expanding overseas with its AliExpress marketplace for oversea buyers. It's also expanding Kaola.com for cross-border purchases. Alibaba is expected to continue to grow its number of merchants, brands, and enterprise customers for its cloud platform.

While there may be many reasons why Alibaba went public in the U.S., perhaps the most interesting thing about the company's IPO isn’t that it listed in the U.S., but that it's listed with the NYSE rather than the Nasdaq—a more traditional home for internet companies. Some suggested that Nasdaq's mishandling of Meta's (formerly Facebook) 2012 IPO made Alibaba skittish.

Since its IPO, Alibaba experienced tremendous success throughout most of 2020. However, after topping $300/share in October 2020, Alibaba shares have tumbled to below $87 in March 2022. Regardless of the recent performance of Alibaba's stock price, when foreign companies list on U.S. exchanges, money is generated for the exchanges and investment banks involved. This makes it a win not just for the foreign company but for the U.S. as well.