Alibaba surges 38 percent on massive demand in market debut

Fri Sep 19, 2014 5:28pm EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Liana B. Baker, Jessica Toonkel and Ryan Vlastelica

NEW YORK (Reuters) - Alibaba Group Holding Ltd's (BABA.N: Quote) shares soared 38 percent in their first day of trading on Friday as investors jumped at the chance for a piece of what is likely to rank as the largest IPO in history, in a massive bet on China's burgeoning middle class.

It was an auspicious debut for the Chinese e-commerce company, which was founded by Jack Ma in his apartment in 1999 and now accounts for 80 percent of online sales in China.

About 100 people gathered outside the New York Stock Exchange at Wall and Broad Streets, many of them Chinese tourists with cameras, and they cheered and snapped photos when Ma exited the building with the kung fu star Jet Li.

The stock opened at $92.70 shortly before noon ET and quickly rose to a high of $99.70, before paring gains to close at $93.89. Some 271 million shares changed hands, more than double the turnover on Twitter Inc's (TWTR.N: Quote) first day last year, although still short of volume for the General Motors Co (GM.N: Quote) and Facebook Inc (FB.O: Quote) IPOs.

"This is the most anticipated event I’ve ever seen in my 20-year career on the floor of the NYSE," said Mark Otto, partner with J. Streicher & Co, who trades on the NYSE floor. "I think today’s move is sustainable: The company is profitable, unlike some of its competitors, and it is a way for traders to tap into the Chinese growth story."

The pricing of the IPO on Thursday initially raised $21.8 billion for Alibaba. Scott Cutler, head of the New York Stock Exchange's global listing business, told CNBC that underwriters would exercise their option for an additional 48 million shares, to bring the IPO's size to about $25 billion, making it the largest initial public offering in history.

But a source close to the matter said the underwriters would make a final decision on whether to exercise the option over the next week or two, based on how the shares trade over the next few sessions.

Alibaba is nearly unknown to most Americans but is ubiquitous in China. The company, which operates China's largest Internet shopping destination, Taobao, and retail site Tmall.com, earned $3.7 billion in the 12 months ended March 31, 2014, up about $2 billion from the prior 12-month period.   Continued...

 
Alibaba Group Holding Ltd founder Jack Ma (C) rings a ceremonial bell to start trading during his company's initial public offering (IPO) under the ticker "BABA" at the New York Stock Exchange in New York September 19, 2014.        REUTERS/Brendan McDermid