Alibaba IPO Stock & Shares Update: Trade Opens Higher Than Expected Despite Delay
Chinese e-commerce titan Alibaba had its initial public offering debut delayed for two hours on Friday because of an imbalance of orders over the much-hyped IPO.
The delay didn't hinder Alibaba in the slightest with shares opening at $92.70, according to a report from USA Today. Estimates early on Friday had the shares opening between $80 and $83. The offering price had to be revised eight times.
Trading on Alibaba shares began at 11:53 a.m. -- about two hours after it was expected to start -- and in minutes leapt to $99 a share.
"We've got hundreds of thousands of orders,'' said Scott Cutler, the New York Stock Exchange's global listings chief. "We're chasing to find sellers. Even at these levels, there doesn't appear to be a lot of sellers."
Alibaba's IPO raised $21.8 billion, more than Visa's 2008 IPO, $17.8 billion, and Facebook's 2012 IPO, $16 billion. The Agricultural Bank of China's 2010 stock offering is the highest ever, earning $22 billion.
With overwhelming demand on Friday, Alibaba could add 40 million shares to the IPO, which could bring the earnings to a record $25 billion.
"There's a lot of hype over this stock. An $80 price is not unreasonable -- demand could stampede the price," said Drew Dorweiler, a business valuation expert with Dartmouth Partners and a trustee of The Appraisal Foundation. "The fundamentals are there for incredible volume and excitement."
Alibaba is modeled as a holding company that includes the sales, merchandising and financial services of companies like Amazon, eBay and PayPal. The company brought in $8.5 billion in revenue in fiscal 2014, an increase from $5.5 billion in fiscal 2013.
Revenue in the second quarter was up 46 percent from the first quarter, while net income increased 137 percent.
Alibaba's revenue and Friday's historic IPO are a far cry from the company's humble roots. Founder and chairman Jack Ma started the company in 1999 from a one-bedroom apartment.
Ma told CNBC that he plans to sell 6 percent of his stake in the company, or 12.8 million shares. He figures to remain the company's largest shareholder, with 7.7 percent hold.
"I don't want to disappoint shareholders. I want to make sure they're making money,'' Ma said. "I worry about making my customers happy."
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