Demand for shares in the online e-commerce giant pushed prices up 38% in market debut
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Executive Chairman and Founder Jack Ma Image: AlibabaThose awaiting the most hotly anticipated tech IPO since Facebook or Twitter would not have been disappointed on Friday September 19th, when Alibaba Group Holding officially listed on the New York Stock Exchange.
The offering, which is likely to be the largest IPO in history, opened at $92.7 per share, popped to a heady $99.7 by noon, and settled at $93.89 at closing. The company is now valued at some $231bn.
Days before the IPO, Alibaba had revised the price of shares between $61 and $66 based on the strength demand. While a 10-15% rise is expected in most tech IPOs, a 38% gain shows just how keen investors are to tap into China’s booming e-commerce market.
The IPO raised $21.8bn for Alibaba, but if its underwriters choose to exercise their share options on a further 48m shares, it would become the largest ever IPO in history at $25bn. It’s current valuation is 39 times earnings per share for its current fiscal year, in line with Facebook, but this is still a very long way off Amazon’s multiple of 264.
Alibaba is an attractive prospect for many as it taps into China’s burgeoning middle class and has a reliable pedigree in a fiercely competitive online market. However, the e-commerce giant is seeing its market share ebbing to ambitious rivals, such as JD.com, looking to capitalise on emerging trends like m-commerce.
Alibaba, started in Chairman Jack Ma’s Hangzhou apartment in 1994, now accounts for 80% of e-commerce spend in China through its various platforms such as the B2C geared Tmall.com and C2C forum Taobao.com. It has also made forays into consumer finance, sports and social networking services.
On paper the former English teacher is now worth approximately $14bn, ranking Ma with the likes of Bill Gates and Jeff Bezos.