Saturday, November 10, 2007

Alibaba too high?

Alibaba shares nearly tripled on the opening day of trading, then sunk 17% the following day. Analysts say the stock is still overvalued. Trades are at 320 times the company's $83.4 million in net profits for 2007.
The only Chinese Internet stock that comes near Alibaba is Baidu, which is at a 177 price to earnings ratio.
How high can Chinese IPOs fly? The valuations could be a sign of an Internet bubble in China, not unlike the crash and burn times of Silicon Valley during the hyped up late 1990s.