Alibaba shares are expected to rally in their first day of trading on Friday as many investors that received fewer shares than they had hoped lined up orders to buy in the open market.
Floor traders at the New York Stock Exchange were getting set for the stock to begin trading, likely to happen about an hour or so aopening bell. Early indications were for the stock to begin trading between $80 and $83 a share, which would be about a 20 per cent jump from it $68 initial public offering price.
The $68 pricing on Thursday raised $21.8 billion for the Chinese e-commerce company. Scott Cutler, head of the New York Stock Exchange's global listing business, told CNBC hundreds of thousands of orders that have been received from investors.
"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.
“There’s a lot of foreign interest, and with that global impact I wouldn’t be surprised if the stock didn’t open until 11.”
A spokesperson for brokerage TD Ameritrade said that early today about half of its customer orders were for Alibaba.
Mark Hawtin, portfolio manager of the GAM Star Technology Strategy, a portfolio for offshore investors, said he was excited about how Alibaba priced and was hoping to buy more shares at the open. However, he said he will not pay more than $90.
Alibaba Group's orange banners were festooned around the exchange, with its logo on NYSE computer screens. The company's founder, Jack Ma, was on hand at the trading floor to watch several long-time customers ring the opening bell at the exchange.
“I don’t want disappointed shareholders, I want to make sure they make money,” Mr Ma said of the pricing, on CNBC, adding: “I worry about when the customer is happy.”
Alibaba's sale values the company at about $168 billion, more than American icons such as Walt Disney and Coca-Cola.
The company’s initial public offering set several records: the $21.8 billion raised on Thursday is the largest ever on US exchanges, surpassing Visa’s $19.7 billion IPO in 2008, according to Thomson Reuters data.
Globally, the deal is currently the third-largest, according to Thomson Reuters. If underwriters exercise their option to sell more shares, it will become the largest IPO in history.
Alibaba’s shares met with intense demand from investors, with 35 and 40 institutions placing orders for $1 billion or more in shares each.
One investor who asked for 200,000 shares, worth about $13.6 million, said he received 1,000 shares. He said he would buy more shares between $75 and $85 if he can but will sell once they hit $90 because he believes fair value is $95-$100.
“The question today isn’t whether the stock will go up. I think today will go well ... The question is if it becomes dead money for the next six months,” he said. “Will it just trade at $93 and stay flat?”
NYSE launched extensive tests to ensure it would be able to handle heavy trading volume and held a call on Friday morning for members of the trading and operations community to make sure systems were working properly.
Mr Ma, a former English teacher, founded Alibaba in 1999 in his apartment. It is nearly unknown to most Americans but is ubiquitous in China, where it is responsible for 80 per cent of online sales. The company earned $3.7 billion in the 12 months ended March 31, 2014, up about $2 billion from the prior 12-month period.
Reuters
