Doing some research for my last week’s post
about Amazon, it was impossible to miss out the Chinese e-commerce giant that’s
making news: Alibaba. Its recent IPO
less than a month ago (Sep 19th) became the biggest in the world.
The fact that this record is held by an E-commerce company is another sign of
the digital era that we’re living.
Initially
raising $21.8 billion, Alibaba took over the record of the biggest U.S. IPO previously
held by Visa ($17.9 billion). Shortly after, the company was able
to sell more shares due to its over-allotment option, which allowed it
to boost the total amount raised to $25 billion and break the worldwide IPO record previously
held by Agricultural Bank of China ($24.3 billion).[i]
However, the stock price started declining very
soon (remember what happened to Facebook's?). After achieving a closing price of $93.89 at its first day of trading[ii], it
closed today at $88.85 per share. According to some experts this is a normal
adjustment that can be due to sales from investors “who bought shares in the
IPO and are now selling with a profit”.[iii] Below
is the stock price performance since the IPO.
The challenge that this Chinese company
presents to Amazon is eminent. However, even though this two companies can be
seen as direct competitors they have some important differences in their business
model. I’ll write about them next week.
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