Well, she went IPO today.
I tried to get in with a limit of $82, but BABA opened at $92.70. An awesome 36% premium for those lucky bastards that booked a few shares before the open.
Rumor has it that the top 20 Mutual Funds were screaming to get a cool billion dollars worth of BABA each. They obviously couldn’t get everything they wanted before the stock hit the floor, but they made up for it in the open market driving the price even higher.
I’m not bitter, just disappointed. It looks like BABA is going to close at about $93.00 with a forward P/E of 39, it is worth every penny, albeit on the slightly expensive side. It is important to note that FB, as a comparison has a P/E of 40 and doesn’t have nearly the growth prospects of BABA. With a market cap of over $231B, this is the new power house on the Internet. Jack Ma, in one day, became the richest man in China. Nice run.
BABA has better margins than EBAY, AMZN, GOOG and even FB. It even has a better growth rate. With 50% of the Chinese people not even on the Internet and very low “brick and mortar” competition in China, this is going to be a Juggernaut with great prospects.
Yahoo has roughly a $35B stake in BABA. YHOO’s market cap is $40B as of today, meaning that if you buy shares, you are only paying $5B for YHOO and you will probably score a sweet dividend at some point. The YHOO brand is easily worth $15 a share, there may even be some upside if the street thinks that YHOO will spend the money wisely.
According to the Mutual Fund Flows, there has been very little new money coming into the market. The good news is that with no new money coming in, BABA had a great open and didn’t take too much away from other stocks. Heck, it might even bring new money into the market due to the publicity of such a great run.
For me, the trade is over for the next few months. No chasing of BABA, just wait until the hype and froth is over. I might even wait for the lock up period expiration and maybe I can catch a deal. Everyone loves a fire sale!