Published On: Tue, Sep 16th, 2014

Alibaba Offering Price Rises, But There’s a Limit

Taobao Revises Fee Plan

Alibaba, which will probably be the largest IPO in history, raised enough cash in only the second day of its Roadshow last week, and is going to have its initial public offering on Friday. At first, it was expected to be priced between $60-$66, but the range has risen to between $66-$68. While some think the price could reach $70 or higher, as hedge fund managers try to buy billions of dollars worth of shares, there is a limit to how how the price will go. Alibaba, the Chinese internet giant, whose value is estimated to be greater than that of eBay and Amazon combined, has learned a lesson from the Facebook IPO fiasco. Alibaba seems determined not to let its IPO price soar out of control.

CNBC’s Jim Cramer said that growth and tech stocks are being sold by fund managers to make enough space for Alibaba. This led to a decline in these stocks and the Nasdaq, but Google, Facebook and Apple may be worth buying, according to Cramer, on an Alibaba-induced sell-off. Yahoo is going to be a major beneficiary of the Alibaba IPO and will likely use the cash from the deal to make accretive acquisitions.

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