Alibaba flies to NYSE

 

What is Alibaba?

Known as the Chinese e-Bay, Alibaba is the world's biggest e-commerce business. The group has three major websites which operate as a selling platform for consumers and businesses. Overall, the group handled $248 billion in transactions last year- that's more than eBay and Amazon combined.

Alibaba on the NYSE

Last week, Alibaba Group Holdings raised its price range from $60-$66 a share to $66 to $68 a share due to strong demand by the market. Indeed, the E-Commerce giant started its IPO at $68 per share, rewarding the company more than $25 billion, which made this the biggest public offering ever on the stock market. The Chinese company started trading on the New York Stock Exchange (NYSE) under the ticker symbol “BABA”. Jack Ma, the name behind this ingenious idea of lifting its company up to the sky

by quoting it on the Stock Market, making him the richest man in China. Well, good for him, but how about the stock performance on the NYSE?

 

Stock Performance

Being the biggest IPO in stock history, BABA, -3.03% entrance to the market was certainly high profile, as its incredibly successful IPO started off on the chart at $92.75 and immediately rocketed to the 99.0 levels in a matter of minutes due to boosted investors' confidence, which made the joy of hundreds of Chinese Investors who became instant millionaires. Well, the joy was of short term as the "BABA" turned things back around in order to form a massive shooting star which cleared about 9.0 on the chart and

landed on the $90.23 levels within seconds. Advisers point out that history's most significant market tops have often been accompanied by crucial events that prompt the average investor to overcome any residue of skepticism they may be having. Alibaba fell up till its second trading day and calculated figures showed a 4% fall in the pair, shocking investors around the globe.

Meanwhile, Alibaba is not the only one suffering from this fall on the stock market. Yahoo, which was the second-largest shareholder in Alibaba and raised about $9 million by selling shares in the IPO, also didn't perform so well. Yahoo stock fell about 5.6 percent, suggesting that investors are uncertain how CEO Marissa Mayer might use the cash to turn around the floundering company.

Future

A big one is whether Alibaba will eventually end up spending a lot of money to stockpile goods and distribute them, potentially depleting future profitability. Nor has Alibaba used up cash building its own fully fledged distribution network. With different project regarding Alibaba in the mind of the Chinese Billionaire, the Chinese E-commerce company is gradually increasing day by day and can largely compete against its competitors such as Amazon and E-bay. Moreover, the product penetration on Chinese

market for Alibaba is highly open as 54% of the market is still free, whereas for the UK, 82% of online market has already been taken, used or saturated. Regarding China's consumer, they are moving fast towards online buying, which is exclusively benefiting Alibaba's market share.

More facts that can back up Alibaba's positive future is that of official statistic figures which states that Alibaba delivers more packages than EBay and Amazon combined. Furthermore, Chinese online surfers are increasing at a rapid scale and forecasts also state that the world's second largest economy might see a rise of 120 million online users by 2016.

But let's get deeper in economic facts, compared to China; U.S has a full blown consumer percentage of 67% in terms of GDP figures. China on its part, has only 36% full blown consumer figure from its GDP figure, which leaves the country with plenty growth upside as the Chinese society transforms itself into a full blown consumer economy. More impressive than the context stats is Alibaba itself. Revenue increased 46% in the last year and the company has an EBITDA margin of 58%. Amazingly, 2% of all of China's GDP goes through Alibaba.

Warren Tancredi By: Warren Tancredi
1231 Views
Like