Sep 18, 2015 (LBO) – The Chinese e-commerce giant Alibaba’s shares in the New York Stock Exchange have fallen below its initial offering price.
Twelve months ago, Alibaba’s IPO priced at 68 US dollars, raised 21.8 billion US dollars for the company and made it the biggest IPO in US history.
The share surged more than 35 percent when it opened for trading, but now it is trading at 66 US dollars, leaving investors space to rethink their strategies.
The stock recorded its highest value of 119.15 US dollars on November 10, 2014 and the lowest value of 60.91 US dollars on September 08, 2015.
Alibaba Group Holdings which operates the website Alibaba.com founded by Jack Ma in 1999 has a tough time ahead as the Chinese economic growth has dropped to its lowest pace in six years.
Many Wall Street analysts, however, remain bullish sending buy signals for Alibaba even though China consumer spending has lowered with prevailing conditions.
Barron’s magazine recently ran a story suggesting that the shares of the giant internet trading company will fall further by 50 percent owing to its poorer consensus earnings estimates.
The magazine argues that the company is hiding their actual position and even went onto criticize the conduct of its chairman Ma for certain covert transactions.
The story points out that Alibaba shares trade at about 25 times the consensus earnings estimate for the year ahead, and that it should be closer to eBay’s multiple of 15.
In a detailed point by point reply to the story, Alibaba said the article lacks integrity, professionalism and fair play.
It said the figures are based on incorrect calculations and even its PE multiple for 2016 earnings would be approximately 20x, compared with eBay’s 15x.
The investor confidence doesn’t seem strengthened by this detailed reply.