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Shares of Alibaba Plunge Lower than IPO Price

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Alibaba

Shares of Alibaba Plunge Lower than IPO Price

Aug 25 2015, 09.48am GMT

STOCK.com

Alibaba had its debut on the New York Stock Exchange on Friday September 19 last year, in what was one of the largest technology IPOs in history. The IPO, which was priced at $68 a share, saw Alibaba (BABA, -3.40%) close at $93.89 after the first day's trading and peak at $119.45 on November 10, while the trend has been steadily downward since that date.

Following an extremely turbulent day on the NYSE on Monday, which saw the Dow Jones Industrial Index fall by over 1,000 points shortly after the market opened, Alibaba shares closed 3.49% down at $65.80, although the share recovered slightly in after-hours trade to be priced at $65.86.

The perceptibly weakening Chinese economy has given investors cause for concern about the slowing revenue growth at Alibaba in addition to the increased competition for market share from e-commerce rival JD.com which is also based in China.

Alibaba reported its latest quarterly earnings last week showing an increase in earnings of 28% to $3.26 billion which missed analyst estimates of $3.39 billion, fuelling investor concerns further.

Moves intended to boost revenue at Alibaba include the recent announcement of a tie up with a top U.S. retailer. Macy’s China Limited, which is a joint venture between Macy’s and Chinese retailer, Fung Retailing Limited, has done an exclusive deal to launch an online flagship store on Tmall Global, the Alibaba online shopping mall for brands.

Alibaba has stated its intention to bring other U.S. and international brands on to Tmall in the future as a part of its key growth strategy going forward. Brands that already sell on Tmall Include Nike, Adidas, Unilever, Amazon, Costco, Zara, Old Navy and The Gap, with Old Navy and Zara also having concluded exclusive deals with Alibaba.

Big stakeholder in Alibaba, Yahoo (YAHOO, -4.92%), was also an unfortunate victim of the carnage on the markets on Monday which saw its stake in the ecommerce retailer fall from a mid-July figure of $32 billion to $24.8 billion. Yahoo is expected to move its stake in Alibaba to an independent public company to be called Aabaco Holdings during the latter part of this year.

 

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