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Alibaba stock soars in jubilant trading debut

 
Jack Ma, founder of the Alibaba Group, prepares to ring the ceremonial bell on the morning of the Chinese e-commerce giant’s initial public offering on the New York Stock Exchange. Shares rose from the $68 initial price to close at $93.89.
Jack Ma, founder of the Alibaba Group, prepares to ring the ceremonial bell on the morning of the Chinese e-commerce giant’s initial public offering on the New York Stock Exchange. Shares rose from the $68 initial price to close at $93.89.
Published Sept. 20, 2014

NEW YORK — Alibaba debuted as a publicly traded company Friday and swiftly climbed nearly 40 percent in a mammoth IPO that offered eager investors seemingly unlimited growth potential and a way to tap into the burgeoning Chinese middle class.

Jubilant CEO Jack Ma stood on the floor of the New York Stock Exchange as eight Alibaba customers, including an American cherry farmer and a Chinese Olympian, rang the opening bell.

"We want to be bigger than Wal-Mart," Ma told CNBC. "We hope in 15 years, people say this is a company like Microsoft, IBM, Wal-Mart. They changed, shaped the world."

The company's online ecosystem stands apart from most e-commerce rivals because it does not sell anything directly, preferring to connect individuals and small businesses. It enjoyed a surge in U.S. popularity over the past two weeks as executives made sales pitches centered on Alibaba's strong revenue and big ambitions.

Some institutional investors, such as banks or hedge funds, were able to buy the stock at $68 per share, the amount set Thursday evening.

But on Friday, trading under the ticker "BABA," shares opened at $92.70 and hit nearly $100 within hours. By the end of the day, the stock rose $25.89, or 38 percent, to close at $93.89.

Alibaba's Taobao, TMall and other platforms account for some 80 percent of Chinese online commerce. Most of the company's 279 million active buyers visit the sites at least once a month on smartphones and other mobile devices.

The company does not compete with its merchants or hold inventory, serving instead as a conduit that links buyers and sellers of all kinds.

"The business model is really interesting. It's not just an eBay. It's not an Amazon. It's not a Paypal. It's all of that and much more," said Reena Aggarwal, a professor at Georgetown University.

In its last fiscal year ending March 31, Alibaba earned $3.7 billion, making it more profitable than eBay and Amazon.com combined.

Friday's closing price gave the company a value of $231.4 billion, compared with $150 billion for Amazon and $67 billion for eBay.