Alibaba prices at $68, becomes top U.S. IPO

BY Matt Krantz | FROM USA TODAY | 2014-09-19 13:20

  USA TODAY12:26 a.m. EDT September 19, 2014

  Alibaba priced its shares at $68 apiece Thursday, raising $21.8 billion for the company and investors, and solidifying its stature as the biggest U.S. IPO in history.

  The stock is to trade under the symbol BABA Friday on the New York Stock Exchange. While initial investors paid $68 a share, pricing confirmed by Renaissance Capital, strong demand for the stock indicates it could move higher when trading begins and the masses pile in.

  "It's going to bounce up quite a bit," says Francis Gaskins of The company and underwriter is pricing below the level of demand to make sure the shares trade higher, he says. "They want it to be successful."

  The pricing comes in at the top of the latest expected price range of between $66 and $68 a share and well ahead of the initial expected range of $60 to $66. By raising $21.8 billion from the deal, the IPO tops Visa's $17.9 billion offering in 2008, which was previously the U.S.'s No. 1, says Renaissance Capital, which manages an initial public offering exchange-traded fund.

  The $68-a-share IPO price values the entire company at $170.8 billion. That valuation would make Alibaba the 23rd most-valuable company in the Standard & Poor, ahead of other tech titans like Amazon at $150 billion and eBay at $65 billion. Since the company is domiciled outside the U.S., though, the company isn't subject for inclusion in the S&P 500.

  But analysts say the price is attractive for a company so large, profitable and entrenched in a fast-growing economy. "It looks like they priced this to sell," says John Fitzgibbon of


  Perhaps the most interesting aspect of the deal is how much money it will generate for the key players at the Chinese e-commerce company. Founder and Chairman Jack Ma will earn himself a tidy lump of cash worth $867 million. And he's only selling about 6% of what he owns of Alibaba. After selling his stock in the IPO, Ma's stake will still be worth $13.1 billion.

  And then there's Yahoo YHOO, the struggling Internet portal trying to regain its relevance. The company will get a cash infusion of $8.3 billion from the offering by selling a part of its stake. The Alibaba shares Yahoo is retaining will be worth $27.3 billion. All together, Yahoo's Alibaba stock is worth $35.6 billion, a staggering amount considering Yahoo — the entire company — is worth $42 billion. Investors see Yahoo as a company that owns Alibaba stock that just happens to run some Web properties.


  The biggest private investor in Alibaba is Japan's Softbank, which is retaining all of its 797.7 million shares. Those shares are worth $54.2 billion.

  Fitzgibbon expects hectic trading activity Friday as investors who wanted more shares buy them and other investors look to take advantage of the valuation before it runs up too much. He doesn't, however, expect, a trading mishap like what marred early Facebook trading on the Nasdaq. "It's going to be a wild day in the morning," Fitzgibbon says. "NYSE should have it under control."


    • Apple Pay may test regulators
    • Apple's ambition may have accidentally taken it where most companies fear to tread — into the land of financial regulation
    • The market failed to set a new record this week, which some may now consider an unusual event. However, there were events, both unusual and not