September 28, 2020

Alibaba shares surge in their NY stock market debut

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_77700297_tv023966189From BBC

The New York Stock Exchange was festooned in banners of Alibaba’s signature orange and white

Alibaba’s shares closed significantly above their initial price on the New York Stock Exchange (NYSE) on Friday, a sign of the excitement surrounding the Chinese internet giant.

Shares in the company made their debut in the US at $92.70 (£57), after being priced at $68 late on Thursday.

They ended the $93.89 – 38% above the initial asking price.

More than 100 million shares were traded in the minutes after the stock was launched – more than Twitter.

Earlier in the day, founder and chairman Jack Ma rang the opening bell.

The NYSE was festooned with the orange and white logos of the company to herald its arrival on public markets.

The company raised nearly $21.8bn in its share sale, indicating strong investor appetite for China’s e-commerce giant.

Alibaba is now valued at $231.4bn – making it significantly larger than Amazon and Facebook.

US, Chinese and Alibaba flags outside NYSE Investors are eager to get a piece of China’s e-commerce market, which is expected to grow significantly

If Alibaba’s bankers decide to take up an option in which they can purchase 48 million shares themselves, then Alibaba’s launch will have raised nearly $25bn – breaking the previous $22.1bn record set by China’s Agricultural Bank in 2010.

A way in

Alibaba operates a series of online marketplaces in China and elsewhere, handling more transactions than Amazon and eBay combined.

In this photo provided by the New York Stock Exchange, Alibaba founder Jack Ma, center, poses for a photograph before ringing the opening bell to celebrate his company”s initial public offering, Friday, Sept. 19, 2014, in New York Alibaba’s founder and chairman Jack Ma (middle) rang the opening bell in celebration on Friday

It is responsible for more than 80% of online e-commerce in China.

Alibaba’s share sale is being viewed as a way to invest in e-commerce growth in China.

Already, the country is home to the largest population of internet users on the planet – and most estimates say that only half of China’s 1.3 billion residents have signed online.

That is why investors have been angling for some time to get a piece of Alibaba – long the market leader in e-commerce in China.

Alibaba employees at new york stock exchange Alibaba’s employees were at the exchange, behind a banner listing some of Alibaba’s websites

However, investors are not buying shares directly in Alibaba’s companies operating in China, but rather in a holding company in Cayman Islands which has a profits contract with Alibaba.

That has made some wary, and it is one reason why Alibaba did not list on Hong Kong’s stock exchange.

New millionaires

Alibaba Group Holding Ltd founder Jack Ma (2nd L) poses as he arrives at the New York Stock Exchange for his company”s initial public offering (IPO) under the ticker “BABA” in New York September 19, 2014. Like other giant technology share sales of late, Alibaba’s is expected to mint several new millionaires

Either way, the sale is expected to make millionaires out of a large number of the company’s managers, software engineers and other staff.

Currently Alibaba’s single largest shareholder is Japan’s Softbank which holds a 32% stake.

US search giant Yahoo also has a stake.

The firm made a profit of almost $2bn in the three months to the end of June, with sales up by 46% year-on-year to $2.54bn.

Floor of NYSE Traders shouted out prices of the stock on the floor of the New York Stock Exchange

Analysis: Michelle Fleury, New York Business Correspondent:

Wall Street was painted orange this Friday, the colour of Alibaba. The distinctive exterior of the New York Stock Exchange was hidden behind a giant sign for the Chinese e-commerce giant. And the branding was even more visible inside. Traders at the spot on the trading floor where Alibaba made its debut were given branded raincoats. One told me ‘it’s raining cash’.

As the start of trading got closer, those closest to the action shouted out prices to nearby specialists – an old-fashioned method in a high tech market. Alibaba founder Jack Ma stopped to chat and shake hands with several traders as anticipation built up ahead of the first trade.

Such is his cult status back home, there was also a crowd outside the exchange. Chinese fans waited, hoping to catch a glimpse of the man whose success has turned this internet fledgling into a company with a market capitalisation close to that of supermarket giant Walmart.

For more on this story go to: http://www.bbc.com/news/business-29282407

 

Related story:

Why the Alibaba IPO could trigger a selloff

By Mohamed A. El-Erian From Moneynews

Tuesday, 16 Sep 2014 08:13 AM The initial public offering of shares in Chinese e-commerce company Alibaba Group Holding Ltd. could prove to be the biggest in history. Depending on where the money comes from, it could also bring an unpleasant surprise for stock-market investors.

When a company sells shares to the public, investors get the money from various sources. Some borrow it, some use cash they had been keeping on the sidelines, some raise the money by selling other investments. The bigger the IPO, the more it can affect the amount of debt in the system and the prospects for stocks as a whole. The impact is particularly notable if the company and its venture partners are using the money for long-term investments, rather than putting it back into stocks and bonds.

Plenty of investors appear interested in Alibaba. Initial indications from the roadshow for the IPO suggest that demand will far exceed the amount of shares on offer. Indeed, Bloomberg News has reported that the company plans to increase the offering prices, and hence the amount of capital it will raise.

Granted, one must always take the marketing chatter ahead of an IPO with a large grain of salt. Investors have an incentive to exaggerate their initial interest, so the banks running the IPO will be sure to allot them enough shares. The banks want a bigger deal so they can get more fees. The company wants to raise as much money as possible.

That said, the Alibaba IPO will be a very big deal, with potentially marketwide impact. At a possible $22 billion to $24 billion, it could well be the largest IPO in history. So it really matters how investors fund their purchase of Alibaba shares.

The broader market would be least affected if the incremental funds came from a healthy and sustainable increase in borrowing, associated with a greater willingness (and ability) on the part of investors to assume risk. The deployment of idle cash would also have minimal effect on the rest of the market. Although both will occur to some extent, they are unlikely to be the main drivers.

This leaves plenty of potential for downward market pressure as investors sell existing holdings in order to make room for their Alibaba purchases. Given that most investors don’t know as yet how many shares they will receive, most of the selling wouldn’t materialize until quite far into the IPO process. The combined effect could be quite significant.

Hence, don’t be surprised if the Alibaba IPO leads initially to a market selloff. What’s harder to predict is how long it might last. This will depend on other investors’ willingness to jump in and buy the dip — a phenomenon that has already kept the market rally going well beyond what fundamentals justify.

For more on this story go to: http://www.moneynews.com/MohamedElErian/Alibaba-initial-public-offering-stock-selloff/2014/09/16/id/594853/?ns_mail_uid=64942667&ns_mail_job=1586868_09202014&s=al&dkt_nbr=wz184wup

See iNews Cayman story published September 15 2014 “We talked to the man who knows more about Alibaba’s beginning than any other American” at: https://www.ieyenews.com/wordpress/we-talked-to-the-man-who-knows-more-about-alibabas-beginning-than-any-other-american/

 

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