Alibaba Group on track to become largest IPO in history
Alibaba Group Holding Ltd’s (BABA.N) shares soared by 38 percent in its first day of trading as investors flock to buy a piece of one of the largest IPOs in history.
It was the first day that China’s largest online sales company went public. Alibaba accounts for more than 80 percent of online sales in China.
Analysts have expressed that the company’s debut is one of the most anticipated events in years. Alibaba is a very profitable company and allows people to buy into China’s economic growth.
The stock opened at a price of $92.70 and quickly rose to a high of $99.70. Its initial pricing raised a total of $21.8 billion for the company.
This means that Alibaba has a market value of approximately $231 billion, which is more than the combined capitalizations of the two most prominent US e-commerce companies Amazon and eBay.
The head of the New York Stock Exchange’s global listing business, Scott Cutler, has said that underwriters may well issue another 48 million shares.
Whether the company decides to issue more shares depends on how the stock performs in the upcoming week. If the underwriters choose to sell more shares then the company’s IPO will become the largest in history, beating the listings by Agricultural Bank of China Ltd’s in 2010 and by ICBC in 2006.
What in store for Alibaba’s future?
There is a level of uncertainty when it comes to the future of Alibaba’s shares. Will it be trading based on true fundamental values, or will it become another Tesla, where there is a lack of fundamental grounding to its valuation.
Some analysts have said that there’s a high chance that Alibaba is already overvalued. It is about to enter a new stage where margins may be affected over the new few quarters.
Jack Ma is the company’s executive chairman, with a total fortune of more than $14 billion, ranking him among the likes of Jezz Bezos and Bill Gates.
According to CNBC, Jack Ma said the following about the company’s pricing:
“I don’t want disappointed shareholders, I want to make sure they make money.”