Alibaba Group (BABA) Prices Offering at $68 Per Share

Shares of the Alibaba Group Holdings Ltd (BABA) were priced at $68.00 apiece, making this morning's initial public offering of the Chinese Internet giant the largest U.S. IPO ever. The company will raise a minimum of $21.8 billion at that price. The offering was originally priced at $60 to $66, but was raised to $66 to $68 with the company pricing the offering at the highest price of the range late Thursday.

Hangzhou, China based Alibaba Group Holding Ltd is a network of internet e-commerce and business to business websites and web portals.
The company has a payment and escrow service called Alipay which accounts for as much as half of all online payments in China, as well as a shopping search engine and cloud computing services. The company, founded in an apartment by Jack Ma, became a group in 1999, when the website was formed as a business to business portal connecting Chinese manufacturers to foreign buyers. The company's consumer to consumer portal, Taobao is similar to eBay and features almost one billion products.

At the IPO price, Alibaba will have a market valuation of $168 billion, which makes it one of the world's 40 largest publicly traded companies and worth more than U.S. online shopping giant, (AMZN) with a current valuation of $150 billion.

Alibaba Group originally wanted to have its initial offering in Hong Kong and listed on the Hong Kong Stock Exchange. Nevertheless, due to the company not wanting to alter its current structure, which gives a committee of 30 people employed by the company control over appointments to the board, Alibaba decided to list in New York.

While Alibaba's IPO has been patiently awaited by investors, this is not the first time the company has gone public. In 2007, Jack Ma listed the website on the Hong Kong Stock Exchange. raised $1.7 billion, a record amount for an Asian Internet company.

The offering was priced at 13.50 HKD and began trading on November 6, 2007. Shares popped to $39.50 apiece on the first day, which became the all time high price for the stock. The stock never recovered, trading around 10 HKD per share in 2012, the parent company offered to take the company private and paid 13.50 HKD per share, the same price as the IPO.

The $68 price was arrived at by Mr. Ma, Executive Vice Chairman Joseph Tsai with representatives from the company's two largest shareholders, Japanese Softbank Corp. and Yahoo Inc. YHOO The six investment banks underwriting the offering were Citigroup Inc. (C), Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc. (GS), J.P. Morgan Chase & Co. (JPM) and Morgan Stanley (MS).

While the price of the offering is at the high end of the range, some analysts believe the stock could have room to rally this morning. An initial high opening price on low volume would be optimal for the stock to continue climbing, however if the stock opens flat on high volume, it could indicate that the original pricing was too high.

Other News About Alibaba
Alibaba Frenzy Escapes Small Investor
Due to unfamiliarity with the Asian market, small U.S. investors will be largely left out of the IPO.
Goldman Sachs Named 'Stabilization Agent' for Alibaba Stock Offering
Investment banker serves in important role in this morning's IPO.

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Citi, Bank of America Offer Discounted Mortgages
Banks will offer the discounted mortgages to low income borrowers.

Published on Sep 19, 2014
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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