The whole thing seems like a clever scheme by Chinese companies and Goldman Sachs to sucker money out of U.S. investors.
It is. What do you really own with Alibaba? The websites? No.
What's really for sale: When investors buy Alibaba, they are actually purchasing shares in a Cayman Islands entity called Alibaba Group Holding Limited.
But that company -- surprise! -- doesn't actually own Alibaba. Instead, Ma and another co-founder, Simon Xie, own most of Alibaba's biggest businesses according to Chinese law. Ma and Xie are then under contract to turn profits over to the Cayman entity.
The arrangement is called a variable interest entity (VIE), and is necessary to get around China's strict foreign investment rules. But investors should be aware of the structure -- especially since Chinese courts have not clarified the legality of the arrangement.
Voting rights and control in the company? No.
So what the fuck do you actually own? Hope and promises. My ex-wife gave me those.
P.S. Even the Hong Kong stock exchange spurned Alibaba.