World’s biggest IPO – Alibaba debuts at $92.70 a share

News by Bertram on September 19, 2014 add comment 527 views

Chinese e-commerce giant Alibaba will debut this morning on the New York Stock Exchange as the biggest public offering of all time. The company founded by Jack Ma in 1999, will raise as much as $22 billion.

The historic IPO was set to price at $68 a share, but quickly shot to over $92/share! The company will have a market capitalization of $168 billion. Alibaba will be listed under the ticker ‘BABA’.

For those wondering what they should do when Alibaba’s shares start trading Friday morning, broker/analyst Cantor Fitzgerald recommends they buy.

The broker initiated research coverage of the Chinese Internet retailing giant with it’s top buy rating. Analyst Youssef Squali placed a 12-month price target of $90 on the shares BABA, +35.99% which represents a 32% premium to $68-a-share pricing of Alibaba’s initial public offering late Thursday.

Squali believes Alibaba is the best way to play growing online consumption in China, and has the potential to dominate the global online commerce over time.

“We believe that a differentiated pricing model, strong brand, and unmatched scale give Alibaba an unfair competitive advantage relative to peer both in and outside China,” Squali wrote. “While the stock’s not cheap, we believe the company’s outsized growth and margin profiles, if sustained, should support higher valuation over time.”

Alibaba sees over 80% of all Internet retailing volume in China, Squali said. And with $296 billion in gross merchandise value in China alone, which is a measurement of the size of a company’s online marketplace, Squali said Alibaba is already larger than Amazon AMZN, +1.70% and eBay EBAY, -0.32% combined.

Alibaba Group Holding Limited is a publicly traded Hangzhou-based group of Internet e-commerce businesses including business-to-business online web portals, online retail and payment services, a shopping search engine and data-centric cloud computing services. In 2012, two of Alibaba’s portals together handled 1.1 trillion yuan ($170 billion) in sales, more than competitors eBay and Amazon.com combined.The company primarily operates in the People’s Republic of China, and in March 2013 was estimated by The Economist magazine to have a valuation between $55 billion to more than $120 billion.

For those comparing notes, Amazon is now over $300/share, after 3 stock splits in their history. This may be an extremely volatile investment but a bargain when comparing volume and potential growth expectations. Be afraid…very afraid.