Alibaba (NYSE: baba) opened Friday to explosive numbers in the stock market, and the future is only going to be brighter.
Money Morning is reporting that Alibaba Group Holding Ltd. (NYSE: BABA) stock closed at $93.89, a 38 percent gain from the company’s offer price of $68-per share. BABA shares closed up 1.2 percent from their opening price of $92.70.
When BABA Stock opened at $92.70, early shareholders had an immediate return of 36.3 percent from the offer price.
Shortly after hitting the market at 11:53 a.m., BABA stock hit a high of $99.25, a 46 percent jump from the $68 offer price.
Demand for the stock was almost overwhelming. More than 100 million stocks changed hands in the first ten minutes of its opening, and over 271 million BABA stocks traded for the day.
The biggest winners in the historic IPO (initial public opening) were institutional investors, as 50 percent of Alibaba shares was offered to just 25 institutional accounts. At the end of that portion, 40 institutional accounts had 80 percent of all Alibaba shares.
Alibaba finished the first day with a valuation of $231 billion, far surpassing the valuations of Facebook ($200 billion), Amazon ($153 billion) and eBay ($65 billion).
“We want to be bigger than Wal-Mart,” Alibaba Founder Jack Ma said this morning. “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 raised $21.8 billion. That price could climb much higher – possibly to $25 billion – depending on how many shares the deal’s underwriters purchase following the IPO.
With the Chinese online market expected to triple in just three years, it’s a safe bet Alibaba will do quite well.
One potential drawback to Alibaba stock is their corporate sturcture. Alibaba’s decision making is done by Alibaba’s board. Stockholders don’t have many voting rights. Then again, tech giants Google and Facebook run similarly. This will not be an issue with future stock sales.
Insider Monkey is already predicting that Alibaba stock will open at $93 a share and close at more than $100 a share. NYSE’s Scott Cutler now says current indications show that Alibaba stock will open between $92 and $93. These indications have been creeping up over the last couple of hours from first $80-83, then $84-87, and then $86-$88, and then $87-$89, then $91-$92, and now to $92-$93. He also indicated that they are getting closer but they aren’t there yet. It wouldn’t be too much of a stretch to predict that Alibaba Group Holdings Ltd (NYSE:BABA) will open at $93.
We also know that they wouldn’t want Alibaba Group Holdings Ltd (NYSE:BABA) shares decline after the open, so they will try to set the price at a point where there are still tons of buyers out there. This tells us that Alibaba Group Holdings Ltd (NYSE:BABA) shares will probably close above $100 at 4 p.m. today.
[Image courtesy of Stock Wise Daily]