Alibaba US IPO launches on NYSE

Global Business

Alibaba's IPO NYSE opening bellSmall business owners rang the NYSE bell Friday for Alibaba’s IPO as a symbol of founder Jack Ma’s philosophy, “Customers first, employees second, and shareholders third.”

E-commerce giant Alibaba began trading on the stock exchange on Friday (September 19), in what could be the biggest U.S. tech IPO of all time. CCTV America’s Karina Huber reports.

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The company’s shares priced at $68 on Thursday (September 18), making it one of the biggest initial public offerings in history, and is expected to raise some $22 billion.

For Alibaba the IPO represents not just a chance to raise capital, but is also a milestone for the company, which reported net income tripling to nearly $2 billion in its most recent quarter.

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Analysts called it a ‘coming of age’ for the company that began its life in a one-bed apartment owned by co-founder Jack Ma.

“I think it’s kind of a coming of age for Alibaba, and now it’s a listed company it feels it’s on a par with its principle competitor Tencent,” said Duncan Clarke, chairman of Bda Investment Advisory Strategy Consulting.

Tencent, China’s main other internet player comparable in size, listed on the Hong Kong stock exchange in 2004, raising $800 million. The areas the two firms operate in have increasingly overlapped as both firms move into new areas, such as online finance.

“Alibaba is engaged in a pretty intense competition for the future with Tencent as its primary competitor in terms of the new areas that it’s going to expand into, maybe in the media, in social networks, etcetera. It also has e-commerce competitors like and a raft of other niche players. So it’s good to have a validation from the stock market, it’s good to have the cash,” said Clarke.

Alibaba is responsible for 80 percent of online sales in the world’s second-largest economy, and works with a number of businesses there including consumer online marketplace Taobao and payment service Alipay.

While the firm handles more transactions than and eBay combined, an Ipsos poll conducted for Thomson Reuters found that 88 percent of Americans had never heard of the company.
With a proven track-record for being profitable, analysts say Alibaba still has lots of room to grow in the Chinese e-commerce market, making it so attractive to international investors.

“With its revenue up 52 percent year over year last year, and more profit than eBay and Amazon combined, it’s a tremendous startup still,” said Matt Turlip, senior analyst with Privco, a private company financial data provider based in New York City.
Kathleen Smith, an IPO ETF Manager at Renaissance Capital, however, says Alibaba still has challenges.

“There’s still these governance questions that people have, and I think the management has to prove itself. They’ll have the next couple quarters of showing what they’re all about and letting investors know that they are running the company for these new public shareholders,” she said.
Turlip believes U.S. investors will brush aside those concerns, and he expects the stock to rise to 100 dollars a share within a few quarters.
Smith agrees that expectations are running high for Alibaba. But citing Facebook’s botched IPO as an example, she cautions that is not always a good thing.

When the social network went public more than two years ago, expectations were high it would be a massive success. But the consensus is the beginning was a massive disappointment.
The listing suffered a technical glitch at NASDAQ, which caused a delay in trading and the share price quickly plummeted.
Thankfully, despite a rocky start, the stock has rebounded and is trading way above its IPO price of 38 dollars a share.
“So I would think that Facebook is a good lesson investors should have when they look atAlibaba and realize things don’t always go perfectly,” she said.

But Smith also points out that Chinese listings in the U.S. this year are up an average 45 percent, and that bodes well for Alibaba.

Story compiled with information from CCTV News, Reuters and The Associated Press.