Alibaba, Open Sesame!

Just like the novel, Alibaba.com's opening day listing of its IPO shares happens today reminiscent of a magical bang, despite the previous day's whopping 5% collapse in Hong Kong stock market! Its share price opened more than twice the IPO offer price of HK$13.50 and closed with a price gain of about 80%! For the record, the IPO was oversubscribed 150 times, indicating the frenzy of investors chasing after the world's second largest internet offering after Google in 2004. For those who were fortunate to be awarded the shares from IPO, it is indeed like a strike of lottery!

Let's look at the statistics again....effectively at the IPO price, Alibaba was trading at 106 times its 2007 earnings....much more than any of its peers such as Google (about 46 times) and eBay (about 23 times). Does Alibaba deserve such a loftily high valuation? Definitely not! How about double that with current price? I'm afraid the BUBBLE has just gone bigger!