Alibaba share price: Where next ahead of Ant Financial's IPO?

Alibaba US, Hong Kong shares rallied 4% and 7% last week

Hong Kong shares of Chinese e-commerce giant Alibaba Group Holding are still trading at a 7% premium on Monday 13 July 2020, days after it was reported that the company’s financial services subsidiary Ant Financial is in the midst of planning for a Hong Kong flotation this year.

Following the news, Alibaba’s American depository share (ADS) and Hong Kong share prices rallied over 4% and 7% respectively.

Ant Group eyeing US$200 billion valuation in Hong Kong listing

Last Wednesday (08 July), Reuters reported that Ant Group – a financial technology company which Alibaba holds a 33% stake in – is preparing for an initial public offering (IPO) on the Hong Kong stock exchange some time this year.

The article also stated that Ant Group was targeting a market valuation of more than US$200 billion in the upcoming listing, based on an initial sale quantity of between 5% and 10% of the firm’s total equity assets, according to two sources close to the matter.

The fintech platform, which operates Alipay and was established in October 2014, is also said to be eyeing simultaneous share sales in both Hong Kong and mainland China. However, a third source had indicated that a listing in the former was more likely at the present moment, due to its less cumbersome listing procedures.

Ant Group reportedly generated an estimated revenue of 120 billion Chinese yuan (US$17.10 billion) and profit of 17 billion Chinese yuan (US$2.43 billion) in 2019.

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Ant Group has since responded to say that the information regarding its IPO plans was incorrect. Alibaba, meanwhile, has yet to respond.

Ant’s Hong Kong IPO, if realised, follows Alibaba’s Hong Kong IPO – its second listing – in November last year. The sale raised nearly US$13 billion in total.

What’s the Alibaba stock outlook?

As at 15:00 HKT on Monday (13 July), Alibaba’s Hong Kong shares are trading at HK$256 each.

IG’s market analysis show that ‘sells’ form 62% of all trades on the day on the Alibaba Group Holding Limited (HK) counter. Meanwhile, 98% of IG client accounts with open positions in this market expect the price to rise, with the remaining 2% expecting the price to fall.

Meanwhile, Alibaba’s ADS closed at US$261 per share on Friday 10 July 2020, based on IG data. For this asset, ‘sells’ formed 51% of all trades so far this month on IG’s platform.

Looking ahead, 51 out of 56 analysts polled by Factset have rated the Alibaba US stock a ‘buy’, with four on ‘outperform’ and one on ‘hold’. In terms of share price prediction, 21 Wall Street analysts have given an average 12-month share price target of US$266.90 for the stock, representing a 2.26% upside from the last traded price.

Alibaba’s share prices on both continents remain steady even though co-founder Jack Ma has reduced his stake in the company from 6.4% to 4.8% since stepping down as executive chairman last September, based on an annual filing released on Friday.

In terms of upcoming events, investors should take note of Alibaba’s financial results for the first quarter of FY2021, scheduled to be released on 13 August 2020.

Read more: SoftBank Group CEO Masayoshi Son resigns from Alibaba’s board

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