The share price for China's huge e-commerce company, Alibaba, soared 38 percent in its first day of trading Friday on the New York Stock Exchange.
The first trades were made at $92.70 a share, and climbed to nearly $100 a share, but eased downward to a bit under $94 at the close. The initial offering price [IPO] was $68 a share, making it one of the biggest IPOs in history.
Some of Alibaba's customers rang the bell at the beginning of trading on the NYSE, but the shares did not actually begin trading until a couple of hours later, as buyers and sellers maneuvered to get their best price.
Alibaba is China's leading e-commerce company and operates the world's largest online marketplaces for both international and domestic trade. The initial public offering involves some 368 million shares -- using the ticker symbol "BABA."
Market analysts say China's e-commerce, which is dominated by Alibaba, is expected to continue expanding rapidly. Critics say Alibaba's corporate structure gives shareholders less say in the company's operation than is usual for a publicly held company.
Alibaba boasts higher sales figures than both Amazon.com Inc and eBay Inc. combined.
Strong start
"This is the biggest IPO the world has ever seen, so there's a celebratory mood on the floor, whether you like it or not,'' said Benedict Willis, director of floor operations at Sunrise Securities Corp on the NYSE floor.
Alibaba executive chairman Jack Ma, already worth an estimated $13 billion, started the trading day. Ma is poised for a big pay day - selling more than 12 million shares and possibly netting hundreds of millions of dollars.
Ma, a former English teacher, founded Alibaba in 1999
in his apartment. His personal fortune is more than $14 billion on paper, vaulting him into the ranks of such tech billionaires as Bill Gates and Jeff Bezos. The deal is also expected to make millionaires out of a substantial chunk of the company's managers, software engineers and other staff.
Nearly unkown to most Americans until this week, Alibaba is China's leading e-commerce company and operates the world’s largest online marketplaces for both international and domestic trade. In China, it is responsible for 80 percent of online sales. The company earned $3.7 billion in the 12 months that ended March 31, 2014, up about $2 billion from the prior 12-month period.
“In the U.S. the same market was split by two dominant companies, but in China, Alibaba, you know, one combined the strength of the two," explained John Wu, Alibaba Group's former chief technology officer. "I think it should be able to maintain this kind of dominance for the next several years at least. In the long run, nobody knows; but in the short run, I still see the company as one of the best managed , best run, and one of the healthiest companies.”
Peter Cardillo, chief marketing economist at Rockwell Global Capital, calls Friday’s initial public offering another boost for the financial markets.
U.S. Internet technology company Yahoo! holds nearly 24 percent of Alibaba and will sell 140 million shares at the IPO. The earnings will help it acquire other tech companies.
However, the Alibaba IPO presents some concerns, particularly because China's Communist government plays a heavy role in markets and major businesses.
Gary Reischel, managing director at Qiming Weichuang Venture Capital Management, says investors must be careful, in part because of Alibaba's size and the early demand for shares.
“I think you have to differentiate between Alibaba the company, which is doing real well, and this as an investment for an individual investor," he advised. "Because then I would look at the perspective that the company has a vast market share today. It almost can’t do anything but go down."
Some material for this report came from VOA's Jim Randle and Reuters.
