This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Early insider investors in Alibaba Group Holdings (BABA) will get their first chance to offload their shares. This follows the expiry of the three-month holding period after the initial public offering (IPO) back in September.
Will we see the same sort of impact that hit Twitter and GoPro when their lock-up periods expired? You might remember that after Twitter’s lock-up period expired for 82% of its outstanding stock, its share price plunged 18% to hit a new low.
GoPro’s stock is also under pressure as their lock-up expiration, on 23 December, draws close. It’s down over 40% since hitting a high of $93.85 in July. It’s worth noting as well that GoPro’s slide has also been driven by weaker sentiment over the company’s execution of its content monetization strategy.
However, Alibaba investors have so far appeared to be unfazed ahead of the lock-up expiry. The stock last closed at $110.65 after four positive consecutive sessions and it’s up 63% since its IPO.
What may be behind the indifference is the relatively small poll of shares that will be freed from the lock up – just 8.1 million units, which represent about 1.6% of shares currently eligible to trade. What will be more keenly watched are the upcoming lock-up expirations next year in March and September. These involve 429 million shares and 1.6 billion shares respectively.
On a daily chart, there appears to be a support level of $104. At the moment, any dips could present an attractive opportunity to go long. There is a consensus forecast 12-month target of $120.40, according to a Bloomberg poll. There are 34 buy calls, three recommendations to hold and two sell calls.