10 Reasons to Go Long Alibaba

10 Reasons to Go Long Alibaba

10 Reasons to Go Long Alibaba

Yesterday, Alibaba announced that underwriters exercised an option to purchase additional shares at the IPO price of $68, bumping the total amount sold from the originally planned $21.8 billion to $25 billion. This makes it the highest IPO in history.

What warrants the company’s impressive valuation? Saxo Bank has pointed out a few things of interest in this infographic that was published just before trading began. For starters, China is still a market that has not reached maturation. Only 36% of GDP is made up of private consumption, and the country is bound to gain 120 million internet users over the next couple of years. Internet penetration is only at 46%, which means there are plenty more consumers to target.

More impressive than the context stats is Alibaba itself. Revenue increased 46% in the last year and the company has an EBITDA margin of 58%. Amazingly, 2% of all of China’s GDP goes through Alibaba.

How’s trading going so far since Alibaba’s debut on the NYSE on Friday? While it finished down on Monday -$4.00 (-4.26%) to $89.89, it is still up 32% over its IPO price of $68/share.

Original graphic from: Trading Floor


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