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Will Alibaba Group Holding Ltd (BABA)’s IPO Befriend FED’s Announcement?

Alibaba Group Holding Ltd (NYSE:BABA)’s in the spotlight promising attractive future spot prices. Donald Luskin, CIO at Trend Macro, expressed his hopes on CNBC that the Initial Public Offering (IPO) of today will not impact the prices too much even with the new Federal Reserve System (FED)’s policy updates. 1

Alibaba Group Holding Ltd (NYSE:BABA) IPO might be affected by the fact that FED chose to relax its grip on the market. Its Committee will add to its holdings $5 billion less, in agency mortgage-backed securities, than the previous value of $10 billion and there will also be a reduction of Treasury securities from $15 billion to $10 billion. There are fears that this update might lead to a more chaotic state of affairs, however it might just be a sign that the current financial market can withstand pressure and does not need that much moderation. Alibaba Group Holding Ltd (NYSE:BABA)’s IPO seems to have precondition the date of the announcement.

“There gets to be this little flavor of mania, where it just gets a little too easy a little too irrationally exuberant, maybe that means it’s time for a correction to set in,” said Donald Luskin.

Being a company with $167.62 billion market capitalization, Alibaba Group Holding Ltd (NYSE:BABA) can still spike sharply in price, and some investors refrain from getting in the turmoil, but the event appears to be neatly calculated and most of the risks hedged.

“[…] but when a smart guy like Jack Ma decides it’s time to cash out, you got to think about that. You want to buy his shares because he’s the smartest guy in the world, but why would you want to buy something that the smartest guy in the world wants to sell,” stated Lushkin.

Alibaba Group Holding Ltd (NYSE:BABA) is doing very well in terms of profitability and future opportunities so it might actually not have a tragic faith in the IPO aftermath, but we cannot predict anything in advance.

Disclosure: none
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