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Alibaba shares end higher despite lockup expiration

Xinhua, March 19, 2015 Adjust font size:

Alibaba shares were little changed Wednesday, as a 180-day lockup period of the Chinese e- commerce giant's shares expired.

Alibaba has been in the spotlight as investors were eager to know whether the e-commerce giant could lose its magic after the lock-up period expires, allowing insiders owning a total of 437 million Alibaba shares to sell.

Some analysts cut the price target for the company, citing near- term challenges to its growth outlook, while others argued that it is a well-time to build positions by upgrading Alibaba.

Barclays Bank, Deutsche Bank and Credit Suisse cut their long- term price targets for Alibaba from 107, 105, 113 U.S. dollars to 100, 98, 112 dollars in the past few days respectively. However, all three banks still have "buy" calls on Alibaba.

"Wall Street has been lowering price target on Alibaba recently to mainly reflect the lower revenue/earnings estimates for the coming quarters. However, longer term, we still have an ' overweight'rating on Alibaba, considering the company's high top- line growth, strong margin profile and promising profitability perspective, and massive scale," said Henry Guo, a senior research analyst at JG Capital.

Meanwhile, Alibaba was upgraded by Stifel Nicolaus to "buy" from "hold" on Tuesday and added to the Stifel "Select List". Stifel cited long-term benefits from improvements to the online retailer's platform, and noted its multiples compare favorably to those of competitor Amazon.

Analysts at Morgan Stanley recommend building positions in Alibaba while "overly bearish sentiment" is presenting an opportunity, according to media reports.

"I am still optimistic on the future of Alibaba. It is pretty normal for a newly IPO company similar to Alibaba's size to experience some stock price consolidation. Institutional investors will replace the original venture capital and early employees shareholders," Kevin Chen, co-founder and chief investment officer of Three Mountain Capital Management, told Xinhua.

"The unlock of large amount of stocks is just one more step for the company to be more mature. On the long run, e-commerce companies are the future. Alibaba is uniquely positioned in the global e-commerce market and it shall reward its shareholders," he added.

According to Alibaba Group, approximately 437 million ordinary shares subject to the 180-day lockup period described in the company's IPO prospectus are available for sale to the public on March 18, 2015.

Of those 437 million ordinary shares, roughly 100 million shares will nevertheless remain subject to Alibaba's employee trading restrictions until after the announcement in May 2015 of its earnings results for the quarter and fiscal year ending March 31, 2015.

There are different lock-up periods for different shareholders, and stocks held by Alibaba's largest shareholders will be frozen until the company's IPO anniversary in September.

Shares of Alibaba edged up 0.11 percent to 84.59 dollars apiece Wednesday.

Alibaba set its IPO price at 68 dollars per share on Sept. 19, 2014 and raised 21.8 billion dollars, making the largest ever IPO in the U.S. history. Its shares touched an all-time intraday high of 120.00 dollars apiece on Nov. 13, 2014. Endite