Nov. 6 (Bloomberg) -- Alibaba.com Ltd., operator of China's largest online trading site for companies, almost tripled on its first day after an initial public offering in Hong Kong, making the stock four times more expensive than Google Inc. relative to earnings.

The Chinese company's shares closed at HK$39.50 from their HK$13.50 offer price. That gives Hangzhou-based Alibaba a market value of $25.7 billion, closing in on Yahoo Japan Corp. as Asia's biggest Internet company.

The stock trades at 155 times next year's estimated earnings, underscoring the surge in demand for Chinese shares that made PetroChina Co. the world's first $1 trillion company yesterday. Alibaba, founded nine years ago by a former English teacher with $60,000, predicts profit will almost triple this year on rising online trades in the world's fastest-growing major economy.

``It's a high valuation but if Alibaba can use its leadership position in the e-commerce market to get more Chinese businesses to pay for its services, it will justify it,'' said Rafe Xu, an analyst at Sinopac Securities Asia Ltd. in Shanghai, who plans to initiate coverage on the company. ``They have a lot of work to do.''

Investors got a chance to buy Alibaba shares in last month's $1.5 billion IPO, the biggest by an Internet company since Google's $1.9 billion IPO in 2004. Deutsche Bank AG, Goldman Sachs Group Inc. and Morgan Stanley arranged the Chinese company's sale, which led Hong Kong individuals to order about 257 times the amount of stock available to them.

`Reasonable Pricing'

``The performance of the shares today shows our pricing was reasonable,'' Alibaba Chairman Jack Ma told reporters in Hong Kong today.

Mountain View, California-based Google's stock has jumped more than eightfold since its IPO and now trades at 35 times estimated earnings, according to data compiled by Bloomberg. Yahoo Japan, which operates the nation's most visited web site, trades at 36 times projected profit.

Alibaba also trades at higher multiples, relative to earnings, than other Chinese Internet companies including Tencent Holdings Ltd. and Beijing-based Baidu.com Inc., according to Bloomberg data.

Profit will nearly triple to 622 million yuan this year, Alibaba said in its listing prospectus. Goldman Sachs estimates earnings before stock-based compensation will be 1.24 billion yuan ($166 million) in 2008, according to a report. Including those costs, profit is estimated at 1.02 billion yuan.

``The fundamentals are still in favor of it,'' said Louis Wong, who manages $40 million at Phillip Securities Ltd. in Hong Kong. ``With China opening up, people will see there are a lot of growth prospects.''

Trading Delays

About 536 million Alibaba shares traded today, forcing Hong Kong brokers to face delays in completing buy and sell orders.

``Orders were just stuck in the system waiting for execution,'' said Andrew Sullivan, head of Asian sales trading at Daiwa Securities SMBC Co. in Hong Kong. ``You're only talking about delays of about 10 to 15 seconds, but when something's trading and moving quickly like Alibaba, it makes a difference for the client.''

Alibaba's IPO contributed to an increase in demand from overseas investors, which pressured the Hong Kong dollar to appreciate and prompted the city's monetary authority to sell HK$7.83 billion ($1 billion) on Oct. 31 to defend the currency's peg to the U.S. dollar.

Market Leader

In the quarter ended June 30, Alibaba accounted for 43 percent of total transactions in the so-called business-to- business e-commerce market in China, more than triple its nearest rival, Global Sources Ltd., according to estimates by Analysys International.

Clients can advertise or buy products using Alibaba's Web site for free. The company charges suppliers from China and Hong Kong an annual fee to become so-called premium members, which enables them to gain preferential access to buyers.

The company's joint venture in Japan with Softbank Corp., the country's third-biggest mobile-phone carrier, may start operations ``in a couple of months,'' Chief Executive Officer David Wei said in an interview today. Yahoo! Inc. is helping the company to get access to U.S. users, he said.

China was home to 162 million Internet users at the end of June, second only to the U.S., according to the government-backed China Network Information Center. The nation may surpass the U.S. next year, according to Liu Bin, an Internet analyst at Beijing- based research firm BDA China Ltd.

``The market size is huge,'' Wei said. There are more than 42 million small and medium-sized businesses in China, all potential clients, he said.

Yahoo shares fell 4.6 percent today, dropping $1.43 to $29.93 at 4 p.m. New York time in Nasdaq Stock Market trading.

Standard & Poor's analyst Scott Kessler in New York said the shares are too pricey after ``excitement'' about Alibaba's IPO propelled the stock as high as $34.08 last month. He reiterated that investors should sell the shares.

To contact the reporters on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net; John Liu in Shanghai at jliu42@bloomberg.net.

Last Updated: November 6, 2007 16:27 EST