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Alibaba shares open up 36% from IPO price in NY
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CHINA’S Alibaba made its long-awaited Wall Street debut yesterday, on the heels of a record stock offering that opens the door to global expansion for the online retail giant.
From an IPO price of US$68, the stock opened at US$92.70, an increase of more than 36 percent.
The sale raised more than US$8.2 billion for the company after fees for underwriters, and about US$13 billion for major shareholders.
Company founder Jack Ma was on the floor of the New York Stock Exchange (NYSE) as trading opened, while a group of Alibaba customers rang the opening bell.
“I want everyone to put focus on our customers today, we’ve come a long away to stand here today, and we’re extremely grateful for them, for China, for this Internet age that brought us success today,” Ma said ahead of the transaction on the NYSE.
“The best way to remain grateful to them is to work even harder and provide our customers with even better service and products,” he said.
“From tomorrow on, we’ll face a tougher future, and I want everyone to work even harder to live up to the trust that investors have given us and to live up to our dream we had from the very beginning,” he said.
“This is the biggest IPO the world has ever seen, so there’s a celebratory mood on the floor, whether you like it or not,” said Benedict Willis, director of floor operations at Sunrise Securities Corp on the NYSE floor.
Alibaba staged a celebration last night at its headquarters in Hangzhou, Zhejiang Province.
Live music played and thousands of hundreds of employees set off fireworks.
“We feel proud to be a part of a great company and we’ll work harder to live up to our longterm vision,” said Sherry, who has worked in customer services at Taobao for three years.
Analysts were upbeat about Alibaba, which dominates the Chinese online retail space with Taobao.com and TMall.com.
“Alibaba is the biggest e-commerce firm in the world in terms of gross merchandise volume,” research firm Trefis said.
The IPO allows investors to get a piece of the huge Chinese market, but it will also fuel Alibaba’s international ambitions.
The company is nearly unknown to most people in the United States, but is ubiquitous in China, where it is responsible for 80 percent of online sales.
The company earned US$3.7 billion in the 12 months ended March 31, up about US$2 billion year on year.
Alibaba’s consumer services are similar to a mix of those offered by US Internet titans eBay, PayPal and Amazon.
About 52 percent of China’s massive Internet user population shops online, according to the China Internet Network Information Center, which is still quite low compared with mature markets.
“WeChat has a mobile payment service, but it’s still a minor player in terms of user base so it’s too early to judge whether it can challenge Alibaba’s position in terms of e-commerce transactions and payments,” said Zhang Ying of Analysys International.
In the second quarter of this year, mobile transactions accounted for 33 percent of the total transaction volume at Alibaba’s two major sites, Tmall and Taobao.
“Listing in the US will expedite Alibaba’s international expansion, but it will face tough competition from big players such as Amazon and eBay in mature markets like the US and Australia,” said Cao Lei, director of the China E-commerce Research Center.
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