Alibaba Sells More Than 100 Million Shares in First 20 Minutes of US IPO

By Sarah Price - 19 Sep '14 13:47PM

Alibaba Holdings, the e-commerce giant debuted on the New York Stock Exchange Sep 19 under the ticker sign BABA and has raised a record $21 billion in its Initial Public Offering (IPO). The company sold 100 million shares in the first 20 minutes of trading.

Alibaba's shares were oversubscribed even before it started trading. The most awaited IPO, which was priced at $68, opened at $92.7 and climbed up to $99.70 before falling to $90.02 at 1:19 pm EDT.

According to USA Today, investors expected the shares to open at $80 to $83 but due to the strong demand, the offer price had to be revised more than 10 times. As a result of oreder imbalances, the IPO was delayed by little over two hours.

Alibaba has managed to raise $21 billion and counting, which is just some a few dollars shy of the word record of Agricultural Bank that raised $22 in its IPO debut at the Hong Kong Stock Exchange. But given the still strong demand, the Chinese internet marketplace could end up raising $25 million by the end of the day, making it the largest IPO in the history of mankind.

"Alibaba said it is offering 320.1 million shares for a total offering size of $21.77 billion. Underwriters have a 30-day option to buy up to about 48 million more shares. That means the offering size could be as much as $25 billion," the Associated Press reports.

Currently, Alibaba is valued at $231.7 billion. Founder Jack Ma, the former English teacher who started the venture from his bedroom in 1999, will reportedly sell 6 percent of his stake in the company i.e. 12.8 million shares. He will retain 7.7 percent stake in the firm to remain the major stakeholder.

Experts are positive about Alibaba's outlook.

"In the short run, it'll outperform the market due to the demand from investors who didn't have a chance to get into the company at the IPO, and also the IPO underwriters will work to provide stability if needed. It has got very strong momentum in the market," Josef Schuster, founder of IPOX Schuster LLC told Bloomberg.

"There are very few companies that are this big, grow this fast, and are this profitable," Gil Luria, analyst at Wedbush told the AP.