US Retail Investors Not So Keen on Buying Alibaba Shares
Alibaba is a giant e-commerce company which is based in China. This year, the company, the Alibaba Holding Group, has made an official announcement, stating that the company will start its initial public offering, or the IPO for short, at the US Stock Exchange. In respect to the Chinese company’s plan to go public, there are not few financial advisers out there, such as Bob Mecca who works for the Hoffman Estate at Illinois, who are very much interested in the plan. As a matter of fact, these financial advisers believe and expect that there will be a pretty massive number of phone calls requesting to buy the shares of the giant e-commerce tech company from the mainland of China. For those who may not know, this particular company from China actually has a bigger sale figure when compared to the sale figure that has been achieved by eBay, Inc. and Amazon, Inc. put together. Taking that into account, financial advisers believe that Alibaba can actually quite easily earn more than US$21 billion from its debut at the US Stock Exchange. Alibaba is, after all, the hottest tech company there is after Facebook.
Unfortunately, the debut of the China-based company in question at the US Stock Exchange has been much lower than expected so far. Investors from the United States of America do not really seem to have any real interest in the Chinese e-commerce company. For the IPO offered by Alibaba, the company can only interest about a quarter of the number of investors that Facebook attracted at the same phase in the process. In addition to that, the number of investors who seem interested in investing their cash at Alibaba is only half of the number of investors Twitter managed to attract during the same investment period. This has well been pointed out by Steve Quirk. For information, Quirks is the senior vice president of the TD Ameri trade Holding Corp, a company that focuses on providing services to traders that actively take part in the trades that take place at a discount broker.
The low number of US retail investors interested in Alibaba is very ironic, considering that investors often get to receive up to 20% of the profits earned from their shares in the IPO. To make things even better, the owner of Alibaba has even been awarded as the wealthiest person in China recently. So, on paper, it looks like Alibaba is a perfect option to invest some money in. Regarding the issue of the low number of investors for the Chinese company, the spokesperson for the company, Robert Christie, has declined to make any official comments at all whatsoever.
Perhaps, what drives the US retail investors away is that Alibaba is trying to sell its shares at the price range of US$60-66 for each and every single piece of the American Depository Share. Honestly speaking, that price range is really too high. After all, the norm for retail investors is to spend their hard earned cash on stocks that are offered at a much lower price for each of the shares. With that being said, it seems as if the Chinese e-commerce company is not really looking forward to the investments from a massive number of retail investors from the US.
However, this does not necessarily mean that things will stay this way for good. The pre IPO roadshow that the company will carry out may just happen to interest even more investors than before. The roadshow will attempt to target fund managers so that the IPO can be further promoted and perhaps even more effectively.
Yet, investors can actually get into Alibaba as well by means of other ways. Yahoo, Inc., for an example, owns 22.4% of the shares at Alibaba. In addition to that, the Soft bank Corp from Japan also owns 34.1% of the shares at Alibaba. So, investors interested in investing their money in the company can actually invest in Yahoo or the Soft bank Corp instead.