SAN FRANCISCO — This may resemble shooting ducks in a pond.
That's how easy the sale of Alibaba Group's IPO shares to professional money managers and wealthy brokerage clients may look in the weeks and months ahead — thanks to the company's strong financials.
That's not to say the shares will be a must-have for retail investors, who were reminded yet again by Twitter that the purpose of an IPO is to raise capital on Wall Street, not pad retirement portfolios along Main Street.
But Alibaba, which has been operating very profitably for some time, is no Twitter, which has never done so and isn't expected to this year by stock analysts.
As Alibaba and its investment bankers prepare for the IPO's road show of investment meetings, its F-1 securities filing shows revenue growth is steadier and profit margins are fatter than those of Facebook when the social-media giant filed for its 2012 offering.
The China-based e-commerce powerhouse is also three times as large as Facebook was then, by revenue.
By early 2012, Facebook's year-over-year revenue growth was slowing significantly as its user base was shifting from desktop PCs to smartphones and tablets.
The company, which hadn't yet rolled out the mobile ad products that are now accelerating its revenue growth, saw its top-line growth fall from 104% (year-over-year) to 55% to 45% in the three quarters prior to its IPO.
Alibaba, by contrast, as of Dec. 31, 2013, posted year-over-year top-line growth of 59%, 47% and 62%, respectively, during its previous three reporting periods.
That averages out to growth in the mid-50% range.
Alibaba's recent operating margins — or what percentage of revenue is left after operating expenses — during the last three quarters were 50%, 48% and 47%, respectively.
Those are better — by about a fifth or so, on average — than Facebook reported in its final S-1 securities filing.
And Alibaba's net margins — or what's left of value for common shareholders after taxes are paid and items such as preferred shares and employee stock options are handed out — have been twice as good as Facebook's were back then.
Alibaba's net income as a percentage of revenue was 41%, 45% and 44% in the last three quarters, respectively, compared with the 24%, 27% and 19% that Facebook was posting in late 2011 and early 2012.
Finally, Alibaba's revenue of $3 billion for the quarter ended in December 2013 was triple the $1.06 billion Facebook posted in March 2012.
Depending on how quickly Alibaba's investment bankers can bring the IPO to market, the company may have to release figures for its most recent quarter ended in March before completing the offering.
In that case, this comparison should be updated.
Yet, the trajectory of Alibaba's recent financials are of a type that might fill the best daydreams of any CEO — and the kind coveted most by managers of pension, retirement and hedge funds looking for IPO shares.
Given that Alibaba is bigger, more profitable and growing at a steadier rate than Facebook was two years ago, it's easy to see the China-based company's IPO being larger and valuing it more richly.
Facebook's offering raised $16 billion and valued the company at just over $100 billion.
John Shinal has covered tech and financial markets for more than 15 years at Bloomberg, BusinessWeek, The San Francisco Chronicle, Dow Jones MarketWatch, Wall Street Journal Digital Network and others. Follow him on Twitter: @johnshinal.