Alibaba IPO Stock Priced at Record $68

Alibaba Group will go public on Friday and the China-based company has priced its stock offering range at $68 per share – valuing the company at $170 billion, breaking Wall Street records with the potential to raise the business at least $22 billion.

The e-commerce giant valued its initial public offering at $68 on Thursday with plans to sell on New York Stock Exchange using the ticker BABA, according to IPO investment advisor Renaissance Capital. Wall Street will set the trading price according to demand, so sales may begin at a higher cost and make it tougher for an average day trader to benefit. Renaissance Capital predicts the stock may open trading as high as $88.  

Trading is more likely to open as high as $80, says Santosh Rao, head of research with Manhattan Venture Partners investment firm, adding that $68 or $70 is a good price for a short-term trader. If it opens around $80 a retail trader looking to make a quick profit and cash out as the price rises should wait for the initial hype to wear off and buy once the price goes down a few dollars, he says.

Alibaba is a good long-term investment because its growth is tied with China’s rising middle class that use the site for retail purchases, Rao says.

“I don’t expect a share price of $100 or $120 right off the bat, but it will go there eventually,” he predicts.

Alibaba has become a behemoth of shopping and online payment sites during its 15-year history, but comparing the company to eBay or Amazon would be misleading because its model is unique: Its largest platform, Taobao, allows manufacturers and consumers to buy and sell anything using its global online marketplace, but unlike Amazon the company does not ship or own any of the products.

Alibaba matches buyers and sellers on its sites, but vendors using its sites also pay the company to advertise their wares.

Demand for tech stocks also led to a huge spike in the IPO price of Twitter in 2013, which made its initial public offering of $26 per share before the New York Stock Exchange opened trading at $45.