Damodaran’s Two Caveats About The Alibaba IPO

The Alibaba IPO is the most anticipated of the year and is likely to be the biggest in history, and anyone who can actually buy for the $60 - $66 IPO price (we should find out the exact price next week) should benefit from the inevitable ‘pop’. To figure out where that leaves the rest of us NYU finance professor Aswath Damodaran revisits his valuation of Alibaba and finds the IPO reasonable, with a few important caveats.

Damodaran’s valuation in line with IPO price range

Damodaran is by no means an Alibaba bear. When he first wrote about Alibaba back in May he valued it at $145.6 billion and estimated a share price of $61.46, assuming 2.37 billion shares...