You Could Buy The Biggest IPO In History, But You Could Make More Money With Alibaba

I get the appeal of IPOs. Who wouldn’t want to say they invested Amazon.com Inc. (AMZN) or Apple Inc. (AAPL) when they first went public? Well, over the next few months, there’s going to be a lot of hype about Ant Group, which if it hits analysts' expectations, could be the biggest IPO ever at $30 billion.

Of course, there’s a catch – shares will be listed in Hong Kong and Shanghai, making the Ant IPO out of reach for most U.S. investors. However, I have a way to own shares of Ant without having to set up an international brokerage account or paying excessive fees to invest in foreign stocks. Best of all, it’s a move you can make before the IPO.

And right now, I want to show you how Ant is going to make owners of this backdoor investment a lot of money.

An Outstanding Spinoff

Originally known as Ant Financial, Ant wasn’t originally considered a tech play per se. In 2004, the company became a popular Chinese-based e-commerce platform that allowed customers to safely purchase from online merchants. The fact that China’s massive payments market is worth more than $67 trillion is a big part of what’s made them such a successful fintech leader.

After becoming so successful, it split off from its parent company and became its own entity known as Ant Financial in 2014. It wasn’t until recently that the company began dropping “financial” from its English name to put focus more on its robust tech. And China isn’t its only destination. Ant Group has also sought to broaden its global reach by teaming up with payment companies in India, Southeast Asia, and Britain.

That’s what makes Ant Group such a great mobile and e-commerce play. It has past, present, and future on its side. That could be why analysts expect it to be worth $30 billion, making it possibly the largest IPO in history. And according to Renaissance Capital, IPOs are taking off in Fall 2020, “on track to beat last year with 170 IPOs raising $50 billion.”

A company is only as successful as its leader. And in this case, Founder Jack Ma did it right again. Known for already one wildly successful company, Ant Group seems to be following right in its footsteps.

Ant Group has been riding the mobile and e-commerce trends in China for years now. It boasts 900 million users in China and over 16 years in the e-commerce world. It has completely dominated the mobile-payment market in China with a 55% share. Compare that to its rival WeChat (TCEHY) Pay’s 39%.

Unlike WeChat Pay, Ant Group has more diversity in financial services: consumer lending, credit ratings, and insurance. It does it all. Not to mention, it runs Tianhong Yu’e Bao, one of the world’s largest money-market funds. Almost half of China has some form of investment in the fund.

Stunning Financials

The company’s share sale will probably be huge. Just two years ago, it raised its funding at a valuation of $150 billion. This made it one of the most richly valued private businesses on the globe. Last year, the company saw a 40% year-over-year jump in revenue at a cool $17 billion. More than half of that 2019 revenue came from its wide variety of financial services. Transactions as high as $16 trillion took place on its e-commerce platform last year – a 20% jump from 2018.

The platform also enabled $500 billion in investments and $290 billion in credit to people and small businesses alike. Many fast-growing tech companies that have IPO’ed in the past few years have lost money in the process. But Ant Group? It’s 2019 profit sat at around $2.5 billion. Ready to jump in on this company sitting on piles of cash?

The World’s Current Largest IPO

I’m looking right to the grand Chinese e-commerce master itself, Alibaba Group Holding Ltd. (BABA), the big company for which founder Jack Ma is best known. Alibaba is the sister company of Ant Group. In fact, Ant Group began as the “Alipay” e-commerce platform under Alibaba’s company. After it split from Alibaba to become its own entity and become what is known as the Ant Group, Alibaba acquired 30% of it.

So Alibaba shareholders reap some of the benefits of Ant Group’s success. Plus, Alibaba is a good investment on its own. Alibaba currently holds the record for the world’s largest IPO at $27 billion. From there, founder Ma has led Alibaba to even more success in the e-commerce market.

Last year alone, Alibaba and its many sites processed $1 trillion in gross merchandise volume. The company also has 726 million annual active customers. Fiscal 2020 revenue sits at a stunning $72 billion, a 31% jump from the prior fiscal year. With a market cap of $741.62 billion, the BABA shares currently sit at $277.96.

On average, Alibaba is growing its earnings at 25% a year. At this rate, they will roughly double in just under three years. Couple that with the catalyst of Ant Group’s IPO, and we are surely headed on the road to wealth with this stock.

Disclosure: None.

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