Alibaba Founder Plans Alipay IPO, Alliance with Apple Pay - Analyst Blog

Chinese e-commerce giant Alibaba Group 's ( BABA ) founder and executive chairman Jack Ma announced his plans to make Alipay, the online payment arm of Alibaba, public.

The announcement comes a couple of months after Alibaba Group, one of the most eagerly awaited listings in recent times, began trading on Sep 19 on the New York Stock Exchange (NYSE).

Jack Ma launched Alipay in 2004 but it was spun off from Alibaba in 2011. Alipay has over 800 million Chinese customers and allows them to purchase foreign brands on TMall Global, AliExpress and other Chinese e-commerce sites.

Alipay recently launched a joint service with ShopRunner, a competitor of Amazon ( AMZN ) in the U.S. The joint venture will enable Chinese customers to buy products directly from U.S. e-commerce sites.

Ma hopes that Alipay will be able to list its shares on China's exchange, which Alibaba was unable to do.

Alibaba is a leader in the Chinese e-commerce market and the first company in the country to make a successful entry into the U.S. Its shares are a great long-term investment opportunity. In fact, since it went public, its share price has surged more than 72% from its record $25 billion IPO price.

We expect Alipay to tread in the former's footsteps and prove to be a great long-term investment opportunity as well.

Ma also announced the probability of a partnership between Apple ( AAPL ) Pay and Alipay. Apple Pay is a new mobile payment system which allows iPhone 6 and 6 plus users to pay bills through Apple's Touch ID application at any wireless pay terminal.

As more and more customers prefer online shopping nowadays, the use of this online payment service has increased. Therefore, the collaboration, if it takes place, will help Alipay to extend its foothold in the mobile payment space on the one hand and help Apple Pay to gain traction outside the U.S. on the other.

Alibaba currently carries a Zacks Rank #3 (Hold). Mercadolibre, Inc. ( MELI ), sporting a Zacks Rank #1 (Strong Buy), is a better-ranked stock and therefore worth considering.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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