It finally happened! The Chinese trading company Alibaba held its IPO at the New York Stock Exchange. Alibaba, the creation of Chinese English teacher Jack Ma, dwarfs both Amazon and eBay with its massive sales revenue. The company, which was founded in 1999, now covers around 80 percent of the massive Chinese online sales market.
Alibaba’s IPO was so large that NYSE had to perform extensive tests to make sure the systems will work flawlessly during one of the largest IPOs in history. So far this year, there have been 195 public offerings as 34 percent increase compared to September 2013. All the public offerings performed this year reached a total value of $168 billion. Alibaba easily exceeded the sum after several months of preparations, combined with rising investor excitement. A couple of other companies decided to postpone their IPOs, as Alibaba took the scene on Friday.
The largest Chinese ecommerce company decided to enter the U.S. stock market after a similar move taken in 2007 in Hong Kong. After a very successful first trading day in Honk Kong, Jack Ma decided to remove the company from the lists five years later as investors have not been impressed.
On Thursday night, a share was valued at $68. After the bell rang on Friday, Alibaba’s shares were sold for $92.7, almost hit $100 later on, after which the price settled down at $93.89, meaning a 38 percent increase. A total of 271 million shares have been transacted during the session, twice the volume when compared to Twitter. Only GM and Facebook had a larger volume during their IPOs.
On Thursday, Alibaba’s IPO initially raised $21 billion. The sum could reach $25 billion if the underwriters decide to buy the extra 48 million shares, thus making it the largest IPO in history.
Alibaba’s market value is now at $231 billion, more than Amazon and eBay, the largest online sales U.S. companies combined. At the moment, Alibaba’s shares are worth 39 times more than the initial estimation for the current fiscal year, similar to Facebook. Amazon, on the other hand, raised its share’s value 264 times.
Yahoo, a major Alibaba shareholder, decided to reduce its stake to just 16.3 percent. The U.S. company gained $8 billion after the first trading day, but its own shares dropped by 2.7 percent. Japan’s Softbank Corp remains the largest shareholder with a 32 percent stake.