Six months after holding one of the most successful and record breaking IPO Alibaba Group Holding Ltd (NYSE:BABA) shares continue to languish at 30% below their peak highs of $120 a share although they are still 25% above the listing price. The e-commerce giant seems to have suffered the same fate as other overhyped stocks that went on to falter after successful IPO’s including Twitter Inc (NYSE:TWTR) and Groupon Inc (NASDAQ:GRPN).
Investors should be worried more on how the company plans to escape the orbit of overhanging insider stock and the plans needed to sustain long-term core institutional shareholders instead of the languishing share price. The stock should remain more volatile in the months to come as big institutional investors remain at liberty to offload stakes in the company on the expiration of the lock-up period. More Alibaba Group Holding Ltd (NYSE:BABA) shares are set to hit the market in the months to come especially on the expiration of more than a billion shares held by insiders such as Yahoo and Softbank Corp.
The downward price pressure was always sure to creep in with respect to Alibaba Group Holding Ltd (NYSE:BABA) shares as it has come to be a common problem facing tech firms on transitioning from a tightly held private company to a public entity. Fund managers are poised to use this opportunity to buy additional stock to make up for what they did not get under their listing allocations.
For Alibaba Group Holding Ltd (NYSE:BABA) shares to bounce back to highs again, the stock needs to be regarded as a core institutional portfolio rather than a Chinese internet stock. The company is establishing this frontier with the unveiling of multiple businesses across the globe, seen as a measure of averting perception that the company is just another Chinese company. This is in line with its original mission statement of making it easy to do business anywhere.
Alibaba Group Holding Ltd (NYSE:BABA) needs more than ever to address the riddle of unscrupulous vendors who continue to sell fake products in its online stores if it is to be considered a legitimate internet play. The company has no significant presence in the U.S a key international market that is expected to play a key role in its long term prospects. Acquiring eBay Inc (NASDAQ:EBAY) or Yahoo! Inc. (NASDAQ:YHOO) remains the only probable play for Alibaba if it is to become a leading internet play outside China according to South China Morning Post.
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