Alibaba has been in the news recently as the company broke a new sales record and launched a secondary listing on the Hong Kong Stock Exchange. Find out more about Alibaba, the record they broke on Singles’ Day, and their initial public offering (IPO).
What is Alibaba?
Founded by former teacher Jack Ma in 1999, Alibaba is a Chinese company with commerce at its center. The company also does business in cloud computing, mobile media and entertainment, and other innovation initiatives. With the help of the Internet and digital technology, Alibaba strives to help merchants, brands, and other third-party service providers engage with customers and operate more efficiently.
Alibaba and Singles’ Day
Originating in China during the 1990s, Singles’ Day is a holiday that was created to celebrate individuals who are not in a relationship. It takes place on 11/11, as the date includes four ‘ones’ that represent four single people. With singles treating themselves to gifts on this day, in 2009, Alibaba helped transform the informal holiday into a 24-hour shopping festival. Singles’ Day has since grown to become the largest online shopping event in the world and over 200,000 brands participated in 2019.
To give you an idea of how big Singles’ Day is, we have compared Alibaba’s 2018 Singles’ Day sales figures to other major online shopping events in the US: Cyber Monday, Black Friday, and Amazon Prime Day. In 2018, these days generated $7.9 billion, $6.2 billion, and $4.2 billion in online sales respectively. With over $30.8 billion in online sales, Alibaba raked in more than the three major US shopping events combined.
This Singles’ Day, Alibaba has set a new record by generating over $38 billion in sales, 26% more compared to 2018. Alibaba reached around $12 billion in sales within the first hour. Within the first hour and a half, sales exceeded the total reached on Singles’ Day in 2016.
November has been an eventful month for Alibaba with a new Singles’ Day sales record and an IPO on the Hong Kong Stock Exchange. This is a secondary listing for the company. Alibaba originally offered its IPO on 19/9/14, on the New York Stock Exchange, for $68 per American depositary share (ADS), with each ADS representing eight ordinary shares. In raising $25 billion for its New York Stock Exchange IPO, Alibaba currently holds the record for the largest IPO of all time.
On 15/11/19, Alibaba announced the launch of its public offering on the Hong Kong Stock Exchange. At least $11.3 billion has been raised so far, less than half of the New York Stock Exchange debut. The shares started trading on 26/11/19 under stock code 9988. 500 million were issued at a price of HK$176 per share (€20.30)  per share. The shares have to be bought and sold in lot sizes of 100, meaning that to own shares of Alibaba on the Hong Kong Stock Exchange, you would have to invest a minimum of HK$17,600 (€2,030.11)  if the share price is HK$176. Alibaba continues to trade on the New York Stock Exchange and shares on the Hong Kong Stock Exchange are fully fungible with the ADSs on the New York Stock Exchange. This means that investors can buy and sell shares on either exchange and that the pricing on the exchanges is unlikely to deviate too far from each other.
Investing in Alibaba
Would you like to invest in Alibaba? Would adding Alibaba to your portfolio help diversify it?
Do you want to invest in the Hong Kong listing of Alibaba? Unlike many other European brokers who do not offer investing on the Hong Kong Stock Exchange, this is possible with DEGIRO. Once Alibaba starts trading on the Hong Kong Stock Exchange, it will become available on our platform. Please be aware that we do not offer live price information for the Hong Kong Stock Exchange and only the end of day prices are displayed. However, price information for stocks can easily be found online. Although live price information is not available, you are still able to place your orders through our trading platform.
The information in this article is not written for advisory purposes, nor does it intend to recommend any investments. Please be aware that facts may have changed since the article was originally written. Investing involves risks. You can lose (a part of) your deposit. We advise you to only invest in financial products which match your knowledge and experience
Sources: Reuters, Alibaba, South China Morning Post, NASDAQ, Forbes, Internet Retailer
As of 19/11/19
1 HKD = 0.115347 EUR