As many of you may have heard in the news, Alibaba Holdings released an initial public offering of their shares on Thursday, September 18th. Alibaba’s IPO has been the talk of Wall Street for the past couple of months, as investors have been waiting to get a piece of Alibaba’s shares. Alibaba Group is a Chinese company manages a few Internet-based ecommerce businesses, including business-to-business online web portals, online retail and payment services, a shopping search engine, and cloud computing services. As of 2013, the company has 7.5 billion dollars in revenues, and is a sought-after commodity for U.S. investors. The company opened at 68 dollars per share on Thursday, but its shares surged 36% and is trading in the early 90’s midday Friday. Currently, the company is valued at more that 200 billion dollars, which places the company close to the top in terms of Market Capitalization. It is interesting to note that many investors who wanted Alibaba’s stock on Thursday were actually shut out in the initial public offering. This is because shares were sold mostly to U.S. investors, and many international investors were not able to get in on the action. The overall hype surrounding Alibaba's shares can be somewhat justified by its tremendous growth in the Chinese Internet space, but I would still be wary of the true value of the company. In recent years, large internet-based companies such as Facebook, Twitter, and Groupon suffered after their respective IPO’s, due to the market overvaluing their businesses. Alibaba very well might be worth its current value or could even be undervalued, but its just important to keep past trends in mind before jumping in to invest.
- Jag Buddhavarapu