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Oct 8, 2014

There have been 195 IPOs this year in the U.S., which is an increase of 34% over last year. Alibaba continues to show the IPO market is strong as it historically eclipsed every IPO this year. 

After pricing its initial offering at $68 a share, Alibaba closed its first day of trading at $93.89. Alibaba is now one of the largest publicly traded companies in the world as it raised $21.8 billion in its IPO.  Let’s look at what went right with this IPO.

The whole marketing strategy behind this IPO, which took place over many months, may have greatly contributed to its ultimate success. Alibaba’s founder, Jack Ma, was presented as a likeable character and actively participated in the 2 week (so-called) road show where he presented to would-be investors just before the IPO. Alibaba was able to show strong growth and profit reports, and demonstrated a trend in online spending by Chinese shoppers that is predicted to continue to increase. Alibaba’s last fiscal year showed sales which were estimated to be more than eBay and Amazon combined, and Alibaba is showing an enormous profit. 

Some intended IPOs even held back this week to make room for this unprecedented event. Even GoDaddy was reported to be considering waiting until early next year for their IPO. But according to Mr. Ethridge of the New York Stock Exchange, there isn’t a need to wait. The IPO market is still hot and one large stock sale won’t “sap” the appetite for other IPOs. Only time will tell if he’s right. But, for now, it appears that the right combination of proactive marketing, solid profits and a positive future outlook contributed to the success of Alibaba's IPO. 

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Marc Fogarty

Marc Fogarty, Audit Partner within Technology and Life Sciences Group, and member of the firm'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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