HOW TO BUY ALIBABA STOCK

Alibaba logo

6/3/2017 Update: Alibaba closed trading on Friday at $124.13 and been on fire for the last six months along with the rest of the market. The last earnings report in May propelled the stock higher as investors were happy with the companies reported numbers. If there is a negative for this stock it is the uncertainty about President Trump and whether he will be as tough on China in his policies as he was in his pre-election rhetoric.

Earlier this year, BABA had the biggest Singles Day ever with almost $18 billion in sales. However, that number showed a growth of only 30% whereas last year’s growth was at 60%. This was seen as a negative and investors continued to sell the stock on Friday. 

What was constant news coverage early in 2016 of a China slowdown and fraud from sellers on the Alibaba website has largely died down. These earnings include news of spectacular progress on the mobile side of the company and have given investors much needed positives for this stock going forward


The biggest IPO of 2014 and of all time was Alibaba. Investors, both novice and experienced, from all over the world were interested in buying the stock and wondering whether they should buy it at the open on the first day or wait for a better price later on. The ticker symbol “BABA” was chosen and it is now listed on the New York Stock Exchange. This came after months of uncertainty and speculation about which exchange (NASDAQ or NYSE) Alibaba would choose. 

Alibaba listed 27 names of directors and board members who will manage the company after they go public. You can view the latest filing of paperwork with the SEC here to read all the details. After the first day of trading, Alibaba was worth approximately $170 billion which made it the largest IPO of any Chinese company and actually the biggest IPO ever in America. By comparison, Facebook’s IPO price of $38 valued the company at $104 billion dollars so Alibaba’s exceeded that by a considerable amount.


How To Buy Alibaba Stock And Get The IPO Price

The Alibaba IPO took place on 9/19/2014 and that was the date regular investors were able to buy the stock for the first time. Unfortunately, you had to be friends, family, or some other insider to get any shares before that date. Like all IPO’s, only people with industry connections and very deep pockets had the ability to be able to secure stock shares at the $68 IPO price.

For everyone else, buying the stock on that first day of the iPO was the only option. And now that BABA trades every weekday on the NYSE you need to have an online broker account (I recommend Motif Investing for its low $4.95 fees) and put money in that account before you can buy the stock. Motif Investing is great for a couple of reasons 1) there are no account minimums so you can open an account with any amount of money and 2) you can buy baskets of stocks (called motifs) which allow you to easily diversify and no other broker allows you to do that. ***You must have a Social Security Number and be a resident of the United States in order to open a Motif account***

Buy Alibaba Stock Via Owning YHOO And SFTBY

There are two companies that hold large stakes in Alibaba and you can buy both of them as a possible way to get exposure to Alibaba without actually owning BABA stock. Those two companies are Yahoo (YHOO) which now holds close to a 16.3% stake and SoftBank (SFTBY) which holds about a 33% stake. Obviously, having a large percentage of ownership in Alibaba as these two companies have, the higher the price of Alibaba goes, the more Yahoo and SoftBank stock should theoretically benefit.

Both stocks ran up in the months before Alibaba’s IPO but now that it has taken place, YHOO and SFTBY have stalled and have headed down. Investors might be taking their profit on those two stocks and investing directly in Alibaba. Of course both of those companies have their own businesses and that affects their stock price as well. Buying either Yahoo or SoftBanks is NOT something I am recommending but it is an alternative way to own some Alibaba.


The Alibaba IPO In The Summer Of 2014 

Interestingly, one of Alibaba’s competitors (JD.com) went public on May 23, 2014 and had a successful IPO. JD.com’s stock closed up the first trading day and then has lost ground since then but the general consensus is that it was a good IPO and it showed strong demand for the stock.

This IPO was viewed as very positive news for Alibaba as they are a much bigger company than JD but in the same general business. Because JD’s IPO went well, investors hoped that meant there would be even more demand for Alibaba stock, which ultimately proved correct.

Alibaba’s IPO offering garnered an unprecidented amount of interest from the media and investors. The company is a little bit of Amazon, Google, and Ebay all combined into one gigantic Chinese company. Investors worldwide were extremely interested in this IPO and it did live up to all the hype on its IPO day with more than 270,000,000 shares being traded. 


193 Responses to “HOW TO BUY ALIBABA STOCK”

  1. How low can we go?? says:

    I have bought Alibaba at 72…I can not beleive how low we can go..Any example of ipo like that big after a year or two??

  2. Prince Samuels says:

    Hello Bruce and thanks for this article. I never bought stock before but I think I will this time. Love it when you said once buy stock you keep it for the long haul. This might be chance to know the important of buying stocks. Thank you very much.

  3. mike says:

    Do you suggest Buying now? or should we wait for a drop?

  4. mike says:

    Hey,
    Great Post.

    Should we wait until the lockup period ends?
    Do you think the stock should go down anytime soon?

    • Bruce Alan says:

      Mike,
      I’m not the person to ask as I never bought the stock and I totally missed the boat on this one. BABA has shot up so fast that I don’t know what to think! Sorry I can’t help.

  5. Susan says:

    Bruce,

    It’s now Oct. 27, 2014. I’m wondering if you could give an update on Alibaba and explain whether it’s worth considering investing now more than a month after the IPO or has that ship sailed.

    • Bruce Alan says:

      Susan,
      I wish I knew. I never bought BABA and it has certainly been very strong of late. After going down into the mid $80 range, the stock is now near its all time high. I also know that in mid December some lockup periods start to expire and company insiders can at that point start to sell their shares. But obviously, if the stock is still doing well at that point it will be less of a worry to investors.

      Right or wrong, I guess I have decided to not buy Alibaba stock. That could change I suppose but I don’t feel I have a good read on where this stock is going or what the appropriate value for it should be.

  6. Paul says:

    Bruce,
    -Are you going to buy BABA in 80 days?
    -What is the after market trading? Is the price after the market trading will be the new price on the next trading day (ex, if BABA closing price is $88 yesterday, but after market trading brings it up to $89 just minute before the open market today. Will $89 is the new trading price at the opening?).
    -I open TD Ameritrade. What is the best resources that I can learn to gain knowledge on stock investing? Do you use Investools? Does TD Ameritrade has similar tools like the what they show on Investools (I have 30 days free trial with Investols).

    Paul

    • Bruce Alan says:

      Paul,
      If I were to buy BABA stock at all in the future, it will probably be after some of the insider lock up periods are over.

      After market trading is the ability to trade after the market closes (for a couple of hours or so) but prices can fluctuate wildly during that time as there are fewer buyers and sellers. I have never traded after hours and really see no need for it personally. I do believe the after hours price influences the opening price of stocks but to be sure you could choose a stock (like BABA) and see if that is so.

      If Investools has a free trial you might try it out but I have no personal experience with it. You might also try wallstreetsurvivor.com as they are free and have a lot of material made for beginners.

  7. JMB says:

    Bruce,

    I am a novice investor I was to buy a few shares of BABA for the long haul. If I select GTC it says I can only keep the shares of stock for 60-90 days. Is that true? I also want to stop limit but only on the lower end to sell even though I don’t expect this to go lower than what I am going to pay to get in. Any suggestions for the newbie?

    Jay

    • Bruce Alan says:

      GTC means good till cancelled. I don’t see the 60 – 90 days on TD Ameritrade but I assume whatever you are seeing means your order will only stay in the queue waiting for your price for so long. Once you buy a stock you own it and can keep it for as long as you want. You will never be forced to sell a stock you own.

  8. Demetris says:

    Both stocks you recommended to buy because of BABA first day of trading was YHOO and SFTBY. Both ended the session with losses up to 2.74%. Why is that. Do you see any come back on the price due to the reasons said in your article.

    • Bruce Alan says:

      Demitris,
      I did not “recommend” either of those stocks. I merely said that based on the fact that they each owned a significant part of Alibaba, their stocks could go up and in fact they did for many months. It was only yesterday and maybe a day or two before that that they went down. I sold all of my Yahoo shares and I have no idea what will happen to the stock going forward.

  9. jane G says:

    BRUCE ALLEN KUDOS TO YOU! I JUST FOUND YOU WHEN I LOOKED UP ALIBABA STOCK. YOUR ANSWERS TO THE MANY CONFUSED NOVICE INVESTORS CLEARED UP SO MANY QUESTIONS FOR ALL OF US.THANKYOU SO MUCH.I WILL BE READING ANYTHING I CAN FIND FROM YOU. I AM A GREATGRANDMOTHER WHO WORKED UNTIL I WAS 76 . ALL MY LIFE I HAVE BEEN A DRIP. PICKING GOOD DIVIDEND STOCKS $25.00 AT A TIME. BELIEVE ME THOSE DIVIDENDS ARE NOW MY MONTHLY PENSIONS. I RECENTLY SOLD MY LITTLE HOUSE AND MOVED INTO A RETIREMENT COMMUNITY. FOR THE VERY FIRST TIME I BOUGHT SOME TECH STOCKS. APPLE RIGHT AFTER IT SPLIT AND I BELIEVE I WILL BUY ALIBABA. I READ THE EXPANSIVE ARTICLE ABOUT JACK MA IN BARRONS AT THE BEGINNING OF SEPT AND I WAS VERY IMPRESSED WITH HIM. WATCHED HIS INTERVIEW WITH JIM CRAMER TODAY ON CNBC AND DECIDED TO BUY. HOWEVER i WILL WAIT UNTIL THE DUST SETTLES BEFORE PURCHASING. I WILL BE GIFTING THESE STOCKS TO 8 GRANDCHILDREN AND 1 GREAT AS INCENTIVES TO START THEIR OWN PORTFOLIOS. I WILL ALSO BE RECOMMENDING THAT THEY FOLLOW BRUCE ALLEN TO KEEP ON LEARNING. I AM STILL LEARNING EACH DAY.IT IS SO MUCH FUN!!see YOU ON LINE AND THANKS AGAIN MEEJANE

  10. Harold E says:

    Bruce, thanks for the article and coverage. Quick question for you. A couple news sites said there was a deadline on the 16th at 4PM when people could have submitted orders.

    Here is an example: http://www.zacks.com/stock/news/147264/how-alibabas-higher-ipo-price-can-help-you

    My question is, could regular shmucks like you and I have really submitted an order then? Or was that deadline just for big institutions?

    • Bruce Alan says:

      Harold,
      Regular shucks like you and I (as you say) could not get in before today. That was for the big institutions and big players who have some sort of connections.

      • Harold E says:

        I see, thank you. Just curious, what kind of “connection” does one need? Is it just based on dollar amount? Could a stranger like me have called up one of those investment banks, and offered a big enough dollar amount, say 500K?

        I remember during the dot-com boom, my stockbroker would sometimes tell me he had a limited number of shares of an IPO that he could give to me. I think it was merely his way of generating extra commissions, ha ha. I don’t remember if it was before or after the public opening, though. I’d be interested to know if brokerage firms can do something like that before the opening.

        • Bruce Alan says:

          Harold,
          I don’t know exactly how it works but if you have a very large portfolio and/or have a relationship with a broker involved with the setting up of the IPO, you could have a chance of getting some shares. Unfortunately I don’t know much more as I have never been that lucky.

  11. Mark says:

    An an experienced investor, I was considering adding BABA to my portfolio and stumbled upon your site while researching the IPO. But after reading through the volume of posts from relatively uninformed novice investors…I’m going to stay on the sidelines for the short term. I’ve not seen this kind of hype since the tech bubble and I fear that the multitudes who will be placing market orders, only to find that their execution prices significantly higher than they anticipated, will be frustrated and dump their holdings within the first week.

    Better to wait a week or two, when those who tried to make a quick buck have departed and I know exactly what price I’m buying at…even if it means I’m buying at a higher price. I’m keeping this asset for the long term, what happens in the first week of this company’s public life won’t matter much if you keep that perspective.

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