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Alibaba’s listing on the New York Stock Exchange is now the biggest ever. Priced at $68, the IPO initially raised $21.8 billion for the Chinese company surpassing Visa’s 2008 IPO ($17.8 billion) and Facebook’s 2012 IPO ($16 billion) but just shy of the record set by Agricultural Bank of China Ltd in 2010 ($22.1 billion).
Due to strong investor demand, underwriters exercised an option to release 48 million additional shares bringing the IPO to $25 billion — the largest in history.
Alibaba stock closed at $93.89 on its first day of trading, up 38% from its IPO price. At these prices levels, Alibaba’s market capitalization is already larger than blue chips like IBM, Oracle, Bank of America and Coca-Cola.
The e-commerce giant already processes more volume of merchandise than Amazon and eBay combined. Alibaba’s network of sites like Taobao, Tmall, Alipay and Alibaba.com dominates 80% of e-commerce in China as the country’s middle class and Internet usage continues to grow. Despite its size, Alibaba is still growing at breakneck pace — revenue in the first quarter this year grew 38% year-on-year and the second quarter grew 46% year-on-year.
One company that’s benefiting from Alibaba’s historic IPO is Yahoo which owned 22.6% of Alibaba pre-IPO. In a regulatory filing, Yahoo sold 140 million shares in the IPO netting itself $9.4 billion in cash.
We talked about Yahoo and the Alibaba IPO on radio back in April and June as we discussed how Yahoo’s stake in Alibaba was a way to invest in Alibaba pre-IPO. Yahoo stock has returned 158% in two years leading up to Alibaba’s IPO.
Chart: Yahoo Finance
We’ll be sharing a case study on our analysis and investment in Yahoo soon, while Investment Quadrant members will receive a video case study as well. Do watch out for that!