The Chinese e-commerce giant IPO
Order imbalances over the intensely hyped, widely sought Alibaba IPO delayed initial trading. Nearly 2 1/2 hours later, American depositary shares of Alibaba Group Holding Ltd., priced at $68, opened at $92.70 at 11:53 a.m. ET. Shares quickly jumped to $99.70 before ending the day at $93.89.
More than 100 million shares traded within 20 minutes of its delayed open and over 271 million shares exchanged hands by the market’s close. Early indications had shares opening at $80 to $83, but demand was so strong, the offering price had to be hiked 10 times.
Scott Cutler, NYSE’s global listings chief, said the IPO was repeatedly delayed by massive order imbalances. “We’ve got hundreds of thousands of orders,” Cutler told CNBC after an hour-long delay. “We’re chasing to find sellers. Even at these levels, there doesn’t appear to be a lot of sellers.”
The IPO raised $21.8 billion, surpassing the $17.8 billion raised by credit card marketer Visa’s 2008 IPO and Facebook’s $16 billion IPO in 2012. Alibaba’s IPO falls just short of the record $22 billion raised in Hong Kong and Shanghai by Agricultural Bank of China’s 2010 stock offering. But given Friday’s demand, Alibaba’s underwriters could add additional 40 million shares, bringing the IPO to $25 billion. At current price levels, Alibaba’s $231 billion market capitalization is greater than blue-chip giants IBM, Procter & Gamble and General Electric.
Alibaba’s business model – unlike other young Internet-focused companies with more prospects and buzz than actual earnings and revenue growth – created swelling demand for its shares. A holding company that combines the sales, merchandising and financial services reach of Amazon, eBay and PayPal, Alibaba had revenue of $8.5 billion in its last fiscal year, up from $5.5 billion in 2013. Revenue for the second quarter ended June 30 jumped 46% to $2.53 billion and net income jumped 137% to $2 billion.
Japanese wireless carrier SoftBank,an early Alibaba investor,which provided the then-startup with $20 million in 2000, has a 37% stake in Alibaba that could be worth more than $60 billion. Yahoo! could eventually be among Friday’s biggest Alibaba winners, but shares slumped nearly 7% in early trading before ending the day down 2.7% to $40.93. The company has previously said it plans to unload about 5% of its 22.4% Alibaba stake.
—-US TODAY MONEY
—-THE WALL STREET JOURNAL
—-THE NEW YORK TIMES