Baba will go well over 210 by year end (say thank you to HK!)
1) HK listing and its pricing
a) The retail part of the offering offering (12.5 million shares plus another 50 million if needed) is set as the lower of the closing price this Tuesday in the US exchange or the set Maximum Public retail off price of $188HK (quick notes each HK share will be equal to 1/8th US Share). This means if current shareholders want to maximize their return for the November 26th offering they need to run up the price to as close to $192 US Dollars tomorrow, which would be equivalent to a 1/8 price of $24.10 or $188 HK dollars.
b) The larger part of the offering is 487.5 million shares for institutional investors. This price may be set higher than the Maximum Public Retail Offer Price, which means as long as part A happens than this part will be purely based on demand. According to multiple articles Alibaba was able to sell through all shares a day early, closing their book tomorrow instead of the scheduled close of Wednesday.
2) Chinese Numerology– if the price starts at $188HK it will jump $199 that Tuesday (26th) and hit $209+HK area by the 29th and $228HK by the 6th.
3) Cashless World Order. As China becomes a cashless society they will need to rethink red envelopes for the February Chinese New Year. What better way to wish someone a prosperous year then with a share of the ultra exclusive Alibaba share (this offering will make 1 share available per 100 people in China ) ….
4) Singles Day. Means JackShit to all of us, no matter how many articles we read about it the idea of a holiday with the combined profitability of Cyber Monday, Black Friday and Valentines Day….but the Chinese Get it, hell they live it
5) Because I said so and no one said i was wrong.
Regarding the ratio of US to HK shares: “The Company’s American depositary shares (“ADSs”), each representing eight ordinary shares of the Company, will continue to be listed and traded on the New York Stock Exchange (“NYSE”). Upon listing in Hong Kong, the Hong Kong-listed shares will be fully fungible with the ADSs listed on the NYSE.”
I intend to hold my most of my 29th calls until the bitter end. Those from the 6th I’ll sell as they quintuple in price.
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.