NYSE; BABA: Alibaba Slows Down, Just A Bit

Some see it as a harbinger of things to come, others see it a temporary setback.

Bidness ETC is reporting that the Alibaba Group Holdings (NYSE: BABA) stock fell 4.3 percent yesterday after its monstrous 38 percent jump on its IPO (initial public offering). Investors, therefore, took hits to their porfolio anywhere from a minimal loss to almost 10% per stock for Alibaba. Though investors are still optimistic about Alibaba’s future, some are wondering if the jump for Alibaba is too fast, too soon.

Many investors feel this is temporary for two reasons. First most high-end tech stocks took hits yesterday, with Yahoo!, Amazon, Facebook and Google all suffering losses yesterday. It would be expected that Alibaba, along with the other high-end tech stocks, to take a small hit. Also, institutional investors who got into the Alibaba stock at $68 a share most likely wanted to sell off some stocks and book a gain. Now that all of the IPO information is becoming clearer, this size brings a volatility.

Trading volume for Alibaba is at 270 million, proving investors are more than interested in the stock. Institutional investors also decided to increase their original option by 48 million shares, because of the huge demand. This also confirmed Alibaba’s IPO gain will go up to $25 million.

EFT Daily News is reporting that though Alibaba had a setback, the future is extremely bright. In 2013, internet users in China exceeded 632 million users, with over 80% of all internet transactions occurred on an Alibaba website. The number of users in China is expected to go beyond 800 million by or before 2016. And with smartphones, tablets, and other mobile devices gaining market share, that number could skyrocket.

“The Alibaba IPO really represents the future of the Internet as we know it,” Fitz-Gerald continued. “Already bigger than Amazon.com Inc. (Nasdaq:AMZN) and eBay Inc. (Nasdaq: EBAY) combined, Alibaba’s IPO is really about who will control the Internet’s core markets and payment mechanisms – two areas that U.S. investors have traditionally held sacrosanct.”

“It’s not just the Internet company of China, it’s the Internet company of the world.”

Many analysts are predicting an explosion in internet-based stocks, looking for huge increases in internet-based businesses into the trillions of dollars, customer growing into the billions, an insatiable global demand for resources and easier ways to get those resources. By 2016, all of these trends are expected to become reality, or be quite close. Alibaba looks ready to take the lead.

[Image courtesy of Stocks.org]