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Alibaba may discount IPO price to avoid Facebook’s pitfall

Alibaba Group Holdings Ltd. and Founder Jack Ma As Company Files for U.S. Initial Public Offering of E-Commerce GiantAlibaba Group Holdings Ltd. and Founder Jack Ma As Company Files for U.S. Initial Public Offering of E-Commerce Giant
Alibaba headquarters in ChinaPhoto by Nelson Ching/Bloomberg—Getty Images

The Alibaba Group doesn’t want to make the same missteps as Facebook in its upcoming initial public offering, which may be the biggest in U.S. history.

The Chinese e-commerce company may price its IPO about 22% lower than analyst valuations, making the total offering worth about $154 billion, according to an average estimate of five analysts surveyed by Bloomberg.

Alibaba hopes that the lowered price will help it avoid the snafu that went down with Facebook’s public offering in 2012, reported Bloomberg News.

Without the discount, the same analysts value the post-listing company at $198 billion.

Facebook (FB) priced its IPO at $104 billion, and then lost nearly half its market value on its debut as investors fretted about slowing growth and a lacking mobile strategy. The stock has since recovered and now trades 75% above its offering price.

Alibaba has been attracting investors interested in tapping into the surging Chinese economy and the country’s 618 million Internet users. The demand could make it the U.S.’s biggest IPO ever when it lists on the New York Stock Exchange (NYSE).

However, analysts are also concerned about Alibaba’s mobile monetization. The company’s effort to attract smartphone users is pivotal to its growth strategy. Mobile transactions accounted for almost 20% of all transaction volume in the fourth quarter of 2013, according to a company filing.

Alibaba has reportedly delayed its IPO listing until early September from its initial expected listing date in early August as it seeks regulatory approval from the U.S. Securities and exchange Commission.