The Alibaba Group Holding Ltd. (NYSE: BABA) stock price saw phenomenal gains during their Initial Public Offering, or IPO, closing at $93.89, a 38 percent gain from the initial offer price of $68 per share, and up 1.2 percent from their opening price of $92.70. Early investors had an immediate return of 36.3 percent from the offer price.
That wasn’t even the highest that BABA stock soared Friday, either. At 11:53 a.m., it hit a high of $99.25, or a 46 percent leap from the offer price.
Demand for BABA stock proved to be extremely high, with over 100 million shares exchanging hands in the first 10 minutes, and a sum of 271 million shares traded the first day.
According to The Wall Street Journal, nearly 50 percent of all Alibaba shares were sold to only 25 accounts, ending a very lucrative day for the institutional investors. The top 40 accounts to buy up BABA netted almost 80 percent of its shares.
The first day closed with Alibaba trading with a valuation of $231 billion, making the Chinese e-commerce company bigger than Facebook Inc. (Nasdaq: FB), which is valued at $200 billion, as well as Amazon.com Inc (Nasdaq: AMZN) and eBay Inc. (Nasdaq: EBAY), which have market caps of just $153 billion and $65 billion, respectively.
Alibaba founder Jack Ma appeared on CNBC Friday morning, clearly optimistic about the future of his company.
“We want to be bigger than Wal-Mart. We hope in 15 years, people say this is a company like Microsoft, IBM, Wal-Mart; they changed, shaped the world.”
At the offer price, the Alibaba IPO raked in $21.8 billion, which could climb to a potential $25 billion depending on how many shares the deal’s underwriters purchase following the IPO.
Jack Ma and other officials from Alibaba were at the New York Stock Exchange on Friday to ring the opening bell. Presumably, this gave Ma a great view to watch his historic IPO unfold. Ma’s stake in Alibaba was worth more than $19 billion.
Ma was also on CNBC prior to BABA stock hitting the market, quelling the fears of wary investors who are fearful about Alibaba’s corporate structure by saying, “Trust us. Trust the market. Trust the young people. Trust the technology.”
Alibaba’s corporate structure is such that it does not provide the shareholders many voting rights in major company decisions. Alibaba’s board will remain at the helm of all corporate movement, which was a turn-off to some Wall Street pundits. This isn’t anything new, however. Shareholders of Facebook and Google Inc. (Nasdaq: GOOG) also have almost zero say in where the company decides to go.
Early investors are sitting pretty on some impressive profits for a single day of trading. However, given the momentum BABA stock is gathering, this could be just the beginning for Alibaba. Money Morning’s Executive Editor Bill Patalon expressed his excitement for BABA stock.
“Alibaba is a historic stock deal. Profit opportunities like this come along once, maybe twice, in an investor’s lifetime.”