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Alibaba IPO – Where Marketing May Be the Key to Future Trading

The Alibaba IPO, which listed on the NYSE and started trading on September 19, was the largest IPO ever (estimated at $25 billion). How does Alibaba plan to keep their shares on a steady incline, now that they’re trading?


Even though Alibaba is domiciled in China, it is incorporated in the Cayman Islands. This presents issues limiting how and where its shares can be traded. The S&P 500 index follows only U.S. firms, and because Alibaba is not a U.S. company, it may not be eligible for its index, and some funds won’t be able to buy it. Some Chinese and emerging-market stock indexes may also have to exclude it because Alibaba is technically not a Chinese company due to its incorporation in the Cayman Islands.

This means that the management team at Alibaba needs to be especially vigilant in keeping up the marketing hype to court investors, keep them engaged and keep their shares rising. Their marketing efforts, combined with publicity about the massive IPO, will not only help bolster the success of the IPO, but hopefully continue to keep its stock price rising. Alibaba's publicity ‘roadshow’ kicked off on September 8 in New York and continues. Let’s keep an eye on things….

Marc Fogarty, Audit Partner and a member of EisnerAmper's Public Companies, Cleantech and International Services Groups. Marc is experienced in public accounting, serving public and private organizations and has presented on IFRS to professional groups.

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