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Was the Alibaba Group Holding Ltd (BABA) IPO the Day the Wall Street Bull Died?

Alibaba Group Holding Ltd (NYSE:BABA)’s IPO may go down in history for more than just its record-setting debut; it may also be remembered in the annals of history as the day the Wall Street bull died after a glorious five-year run following the 2008-2009 financial crisis. As USA TODAY reported, IPO day likely marked a peak that won’t be returned to anytime soon. 1

Since that Friday in which Alibaba Group Holding Ltd (NYSE:BABA) popped 38% and nearly reached a peak of $100 in midday trading, it has stumbled 11% from its midday high, which included a more than 2% tumble from its early morning high yesterday.

Likewise, the broader indexes have crumbled with it; and not only with it, but almost perfectly coinciding with the IPO’s launch. The NASDAQ was mere dollars from its highest point since the tech bubble burst in 2000 when Alibaba Group Holding Ltd (NYSE:BABA) officially went public. It dropped like a rock from there, shedding $125 since that Friday morning.

Similarly, and perhaps even more fittingly, both the S&P 500 and Dow Jones Industrial Average hit record highs on Friday morning before also beginning long slides down over the following week. From its all-time, the S&P 500 reached its lowest point in over a month in just a matter of days. Meanwhile, the Dow dropped over $300 from its Friday morning record over the past week

It’s not only something being considered in hindsight; analysts were predicting ahead of time that the Alibaba Group Holding Ltd (NYSE:BABA) IPO could be the straw to break the NASDAQ’s back, and that there simply wasn’t enough liquidity to be able to absorb it. The $236 billion Alibaba Group Holding Ltd (NYSE:BABA) valuation may also have signalled to everyone that the bull had simply built up too much steam and was running on fumes now.

The markets had their worst day collectively since July yesterday, and it may be the harbinger of a tired bull, rather than a temporary pothole on the bull’s run.


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