Alibaba Stock Drops Amid Hong Kong IPO Buzz

Alibaba shares are expected to begin trading in Hong Kong next week

by Lillian Currens

Published on Nov 13, 2019 at 10:37 AM
Updated on Jun 24, 2020 at 10:16 AM

The shares of Alibaba Group Holding Ltd (NYSE:BABA) are lower, after the company launched its secondary listing in Hong Kong. The China-based e-commerce giant said it expects to raise as much as $15 billion in the initial public offering (IPO), which would mark the world's biggest cross-border secondary listing ever, with the shares expected to start trading in Hong Kong on Tuesday, Nov. 26. This IPO will likely be a boost for Hong Kong, which has been plagued by economic woes as months-long political protests continue. At last check, BABA is down 1.5% at $184.14. 

After last week's earnings report, BABA shot straight up the charts, touching a six-month high of $188.28 last Friday, and notching a 6% weekly win -- its biggest since August. During the past few sessions, however, the shares have been consolidating beneath the $187 region, which served as pressure for the stock back in April. Despite this recent ceiling, BABA sports a roughly 35% year-to-date gain. 

Alibaba has been no stranger to bull notes of late, with at least six analysts lifting their price targets just last week. The equity's consensus 12-month price target of $225.86 is still at a healthy 22% premium to current levels, and represents new highs for the security. Plus, all but one of the 17 covering brokerage firms call BABA a "buy" or better." 

BABA has been a favorite for options bulls, too, with 192,668 calls bought to open during the last 10 days, compared to 60,645 puts. And in the wake of last week's earnings report, short-term options premium is relatively cheap. In fact, the stock's Schaeffer's Volatility Index (SVI) of 27% is in the 11th percentile of its annual range, suggesting options players are pricing in relatively low volatility expectations for BABA right now. 

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