Alibaba has yet to reveal detailed finances, but if it can time stock market, technology and China cycles, number-crunching suggests a twelve-digit valuation isn't out of the question.
The first question is how big the overall market can get. Say e-commerce in China grows 35% a year for the next two years, and that Alibaba can keep its current market share of around 80%. That would give it just under $300 billion of transactions in 2014 - over four times what eBay's marketplaces handled in 2012.
The next question is profitability. Apply a 30% operating profit margin -- roughly the level in September 2012, the last period for which there are reported numbers -- and the 15% tax rate many of China's high-tech companies enjoy, and 2014 earnings would be $3.8 billion. On a forward earnings multiple of 25 times, the recent average for listed Chinese gaming network Tencent, that suggests a market value of $95 billion.
Since a twelve-digit valuation is within reach, it makes sense for Alibaba to open the cave sooner rather than later. Yahoo owns 24% of Alibaba Group.