In 2016, Alibaba’s (BABA) stock dropped to around $8,700 per share, and its shares have since recovered.
The company was also once valued at $40 billion, but as its market value has plummeted in the past few years, it’s now worth around $6.5 billion.
The Alibaba IPO has brought Alibaba a new audience for its business, and the company is now on track to raise $2 billion in its latest round of funding.
But it won’t be enough to match the size of the investment from Alibaba’s new investors.
For one thing, Alibaba still has a lot of work to do.
Its initial public offering in 2017 was a massive flop, and it now faces a number of obstacles ahead of its IPO.
It’s also facing a new set of regulators.
The country’s Securities and Exchange Commission (SEC) is expected to announce its final regulatory proposal for the first round of financing later this month.
In particular, the SEC wants to approve Alibaba’s initial public offer.
To be eligible for that financing, Alibaba must submit a plan for a company to be a listed public company in China and then meet certain requirements, such as providing at least 30% of its profits to shareholders.
This means Alibaba must have at least $20 billion in cash on hand, and must also be a publicly traded company that has a market value of at least 100 billion yuan ($130 billion).
This would mean Alibaba’s IPO would require a massive amount of cash, and that will make the initial round of investing even more challenging.
For now, the company still has some work to complete.
“There are still a number [of] regulatory hurdles to clear before we can go public,” said Daniel Gebauer, a partner at PwC in Hong Kong.
“It’s still very early days.”
The SEC’s proposal is due in February, but it’s unclear when it will come into effect.
And even though Alibaba’s board of directors is set to vote on the proposal at its meeting in February — which is the last time the company will have a stockholder meeting before the IPO — the SEC is expected make its decision before the year is out.
The SEC may have a difficult time convincing the board of investors that Alibaba can meet all of these requirements.
Alibaba has been making a push to attract more people to its business by giving away free e-books and by building up a more-developed app for Chinese consumers.
But the SEC has been skeptical of Alibaba’s ability to convince investors that its platform is a success.
The firm is facing multiple challenges in getting its plan for the IPO approved, including issues with its financial statements, the Chinese government’s approval of the deal, and how Alibaba is complying with the securities laws in China.
The first obstacle is that the SEC approved the deal before Alibaba’s first round was completed.
The second is that Alibaba has yet to make a formal application to the SEC.
If Alibaba fails to get its plan approved before the SEC votes on its proposal, it would effectively have failed to meet all the requirements for the initial public offerings it has requested from regulators.
That could put it in a tough spot as it continues to pursue other rounds of funding to grow its business.
But even if the SEC doesn’t approve the proposal, Alibaba has an even more difficult task to overcome.
If the SEC approves the proposal and Alibaba fails, the deal will be invalidated by the Chinese stock exchange, which could leave Alibaba with less than half of its funding.
As a result, the initial investors could end up paying much more for their investment.
Alibaba’s current market cap is around $70 billion.
But its IPO may put Alibaba’s market cap at just $2.6 billion.
This will leave Alibaba’s future at risk.
In order to make the new funding rounds, Alibaba needs to raise more money.
“This may be the most challenging round in the history of Alibaba,” said Gebauers firm.
“Alibaba needs a $20B investment to achieve its goal of a $1 trillion market cap by the end of 2020.”
For now though, Alibaba is making it through the toughest of the challenges, but that doesn’t mean the company has any choice but to continue pursuing new financing rounds.
Alibaba currently holds around $15 billion of its own money.
Its other funding rounds have included $1.5 million from China’s sovereign wealth fund, and another $500 million from investors from the Chinese e-commerce giant Alibaba Group.