Alibaba’s first lock-up period ends

If you’ve been waiting for a chance to buy Alibaba shares, or get even more, this could be your chance.

Source: Bloomberg

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.

Click to enlarge

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. 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. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.