Tag Archive: yahoo

Alibaba IPO Hits the Market

The most anticipated IPO (Initial Public Offering) in years hit the market yesterday. Alibaba (BABA), the company that seemingly exploded out of nothingness, went public on September 19, 2014. A date that many investors will remember for a long time.

Alibaba had so much buzz built up over the past few months, the valuation of the company was higher than it would have been otherwise. Alibaba was set to open yesterday at $68 per share, in trying to raise about $22 billion. This price values the company at nearly $170 billion. To give you a perspective, Google (GOOGL) is worth about $400 billion. Alibaba came out of no where and worth nearly 43% of what the internet giant, Google is worth. Now that’s what I call an explosion.

The shares of Alibaba rose very quickly. Speculation on what the opening price would be started going from the mid $70s to mid $90s. And because of complications, the share didn’t actually become available for public trading until after 11:30 am, about 2 hours after the stock market begins to trade. And before the stock even went on the public market for public trading, it was worth about $99 per share. That’s a $31 increase of the $68 IPO. If you didn’t have deep pockets, if you weren’t family or worked for Alibaba, you were out of luck. There is no way you could have gotten Alibaba for $68, which is seemed as dirt cheap at the moment. And I know the founder and creator of Alibaba, Jack Ma, is very very happy.

The price of Alibaba shares quickly started to drop. Before you knew it, the stock dropped to just below $90 a share. That’s extremely volatile for any stock. Alibaba shares finished with  a price of $93.89, more than 38% over the $68 IPO price. I know the company and its investors are very happy, including Yahoo (YHOO) who had a very big stake in Alibaba for a long time. A very good investment on their part.

You should expect Alibaba to be very volatile over the next few weeks as investors sell and buy shares based on the hype they collected over the past few months. There is no doubt that Alibaba shares will hit $100 and it may happen sooner than later.

What you need to know about Alibaba shares is that you’re not actually purchasing shares of the company itself. Instead you are purchasing Alibaba Group Holding Ltd. This is a company set up in the Cayman Islands because Chinese law forbids foreigners to own any part of a company based in China. So to get around that, they found this loophole. This is something you need to keep in mind if you decide to invest in Alibaba.

Originally, I planned on investing in Alibaba. And I actually set aside some money to buy the shares, but the price went up so quickly, I didn’t want to risk losing money so I’m holding off for now until the volatility goes down and the price stabilizes. It’ll make predicting the price easier which makes for smarter investing.

Have you invested in Alibaba? Do you plan on investing?

Earlier today, the government released the report on US Jobs. As some have predicted over the past few days, the data was bad. After my report yesterday, the markets went even lower because of the predicted low quality of the jobs report to be released today. And today, the down market carried over.

The Dow Jones dropped more than 250 points so far and it doesn’t look like it’s stopping. The graph on the right, provided by Yahoo! Finance shows the steep drop the Dow Jones Industrial Average took today. The combined drop of yesterday and today has nearly undone the rally we have seen during the last 4 market days of August. The sight isn’t pretty but we will bounce back! The Dow Jones is currently at 11,239, making the gap between the current price and the magic 12,000 mark even greater.

Dow Jones Huge Drop on September 2nd

by Yahoo! Finance

The NASDAQ Composite dropped more than 71 points and is currently at 2,474. The S&P 500 is at 1,173 after a drop of more than 31 points or more than 2.5% of its value. The New York Stock Exchange (NYSE) dropped almost 200 points so far and is currently standing at 7,244.

The US Jobs Report stated that in August, only created 17,000 jobs, which is almost nothing compared to what was expected. What makes this worse is that they revised the amount of jobs for June and July as well. They found that there were more than 58,000 fewer jobs than what was originally thought. So not only did we barely create jobs in the private sector July, we had the numbers for the two previous months wrong. And even worse than that, the government/public sector also cut more than 17,000 jobs in August. They pretty much cancel each other out so the economy didn’t really see any jobs created last month. This is actually very sad.

The unemployment rate stays at 9.1%. This lowers the confidence investors have in the economy. This could signal that the federal government will come out with another Stimulus to encourage consumer spending. The problem with a stimulus package is getting the money. They would have to figure out where the money would come from because they can’t just take it away from something essential and they can’t just print more money because it just lowers the value of the dollar.

We will have to see where things go from here but for today, we can expect the stock market to stay in the red. I wouldn’t be surprised if the stock market actually goes lower than it has so far. The news today was definitely surprising especially the part about the revisions of June and July jobs data. The government has to be able to do something to turn things around and I am not sure if a stimulus would be the best plan. I’m not an economist so I can’t say what would be best but so far, everything they’ve tried hasn’t worked.

Whenever there is economic distress, Gold seems to always jump in joy. Last week, the price of Gold dropped below $1,800 an ounce and stayed there for some time. But the bad trading sessions over the past few days has given Gold the chance to rally all over again. Today gold has gained more than 50 points. Currently it sits at $1,878 an ounce, well over a $100 gain from last week. If the economic distress continues and the stock market continues to plummet, we can expect gold to keep rallying. It does seem that the Gold bubble isn’t bursting, it has life left. I still believe that it will burst sooner or later because the economy is bound to bounce back. We have seen economic hardships like this several times in our history and every time, the economy recovers. We have no reason to believe that this time is any different.

We just have to keep a positive outlook. Hopefully the economy turns around soon and hopefully the job data for September is better when it’s released next month.