E-commerce + China + a name plucked from an age-old fairy tale, with a dash of mystery.
It's got all the ingredients for an overheated IPO. So, expect the superlatives and hyperbole to be fast and furious this week as the investing world prepares for the highly anticipated Alibaba intial public offering expected to upend Wall Street on Friday.
The Chinese e-commerce giant, which has been described as a behemoth that combines eBay Inc. and Amazon.com Inc. , is expected to raise more than $21 billion. If things go as expected, its market valuation could hit a record $200 billion, almost twice the $104 billion valuation of Facebook Inc. at its May 2012 IPO. Alibaba set its initial offering price at between $60 and $66, according to its updated IPO filing with the U.S. Securities and Exchange Commission, but bumped that range up to $66 and $68 in response to the high demand. The company will begin trading on the New York Stock Exchange under the ticker “BABA.”
Alibaba's investor roadshow launched last week with a presentation that attracted over 1,000 hungry hedge fund and mutual fund executives, many of whom were turned away from New York's Waldorf Astoria hotel. Other presentations in Boston, San Francisco and Hong Kong have been almost as crowded. And many high-profile investors, such as Third Point's Daniel Loeb, have sought out one-on-one meetings with the company's executives.
But for all the hype, Alibaba's timing might not be perfect -- returns of IPOs so far in 2014 are mixed. About one-third of the 188 stocks that debuted this year are selling below their IPO price, reports Reuters. New stocks have risen an average of 19 percent over the first three months of trading, compared with 36 percent in 2013, and 23 percent in 2012, according to research firm Dealogic in New York.
Yet some huge IPOs, which initially crashed and fizzled, such as Facebook have bounced back and are booming. Though Facebook stalled on its first day of trading on May 18, 2012, it has since almost doubled.
Here's a breakdown of the some of the biggest IPOs of the last 20 years, how the stock fared on its first day, first year and up to now.
1 DAY: + 28.4%
1 YR: + 28%
1 DAY: 0.6%
1 YR: -30.9%
1 DAY: +3.6%
1 YR: -34.0%
1 DAY: +0.8%
1 YR: 40.2%
NOW: Company was split up in 2012 into two entities, MDLZ (+32.55% since split) and KRFT (+28.31% since split)
1 DAY: +36.0%
1 YR: +17.3%
NOW: + 38.47%alibaba, alibaba IPO, alibaba performance, alibaba stock, BABA stock, how to buy BABA, biggest IPOs, largest IPOs, Visa IPO, Facebook IPOHere's How The Biggest IPOs Have FaredIBTimesAlibaba IPO: 5 Reasons Why China’s E-Commerce Giant Is Going Public