Alibaba Group Holding Ltd (NYSE:BABA)’s stock opened for trade today at $92.70 and went as high as $99.70, but the most important question being asked is where will it close? Some of the biggest tech names saw massive gains on their first day of trading and if everything goes as per analysts’ expectations, Alibaba Group Holding Ltd (NYSE:BABA) will be no exception. Josef Schuster, founder of IPOX Schuster, and Jeffrey Dachis, CEO and co-founder of Razorfish were recently on CNBC to discuss about the price that Alibaba Group Holding Ltd (NYSE:BABA) will trade after its debut.
“Well, see average IPO, say average technology IPO since 2012 actually has closed between up between 10 and 12% based on the first close, based on the offering price, so we expect 10-15% higher, may be a little higher on say high ends of somewhere between 75 and 80, that’s what the stock will be closing today in my opinion,” Schuster said.
Schuster feels that by listing in the US, Alibaba Group Holding Ltd (NYSE:BABA) is also trying to extract marketing business as it is a relatively unknown e-commerce player in the US. He believes that under-pricing the IPO is a strategy deployed by Alibaba Group Holding Ltd (NYSE:BABA) so that it gets a good surge on the opening day, which will result in it getting a lot of media attention and will provide its brand visibility.
According to Schuster, Alibaba Group Holding Ltd (NYSE:BABA)’s IPO valuation of 18 times its 2014 revenue is based on the fact that its mobile revenue will continue to grow in the future. He feels the Alibaba Group Holding Ltd (NYSE:BABA)’s mobile revenue growth will be dependent on how the e-commerce company does in US and European markets.
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