Alibaba Pops 38% In Public Trading Debut, Fades The Following Week

by Felix RichterStatista.com

Chinese e-commerce company Alibaba made its stock market debut last Friday in what turned out to be the largest initial public offering of all time.

Having initially planned to raise $21.8 billion at a price of $68 per share, Alibaba's underwriters decided to exercise an option to sell additional shares pushing the total IPO value to $25 billion.

After opening at $92.7 on Friday, Alibaba's share price BABA quickly rose to almost $100 before coming back down and closing at $93.89, which represents a 38% increase from its IPO price. Compared to other high-profile internet IPOs, Alibaba's first day pop was big but not huge. Most recently, Twitter's shares had soared 72.7% on the company's first trading day last November. Facebook's shares on the other hand had hardly moved beyond the IPO price when the company went public in 2012.

However, it needs to be remembered that a big first-day pop is not necessarily an indicator for a successful IPO. While it does create positive headlines, a big pop can also mean that the IPO was not accurately priced and that the issuing company could have raised more capital. Alibaba's underwriters appear to have found the right balance here. The company's share price climbed high enough to create positive headlines without leaving too much money on the table.

The trading of BABA in the first four days this week has seen the the price pull back from the opening day close by 5.3% to close at 88.92 Thursday 25 September.  The price behavior of the stock indicates that the IPO pricing was pretty close to opitimal.

This chart shows how Alibaba's first day as a public company compares to the stock market debuts of other internet companies.

Infographic: Alibaba Pops 38% in Public Trading Debut | Statista

 

No content is to be construed as investment advise and all content is provided for informational purposes only.  The reader is solely responsible for determining whether any investment, security ...

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