A cursory look at the IPOs of the last decade shows that Alibaba Group Holding Ltd (NYSE:BABA)‘s 38% kick is off the charts and based on statistics from last 34 years, the ride to the skies has just started. CNBC‘s Sara Eissen discussed these past performances with an Options Action trader to sneak a peek at Alibaba Group Holding Ltd (NYSE:BABA)’s future.
A relevant analysis would be to look at two categories for companies that lie in the same industry as Alibaba Group Holding Ltd (NYSE:BABA), that is the big IPOs of the tech industry. The options trader drew attention to four big names in this regard, namely, Microsoft Corporation (NASDAQ:MSFT), Twitter Inc (NYSE:TWTR), Facebook Inc (NASDAQ:FB), and Amazon.com, Inc. (NASDAQ:AMZN). The cross categories included percentage change in the stock price on the ‘first day’ of the IPO and percentage change in the ‘first year’ of the IPO.
Given Alibaba Group Holding Ltd (NYSE:BABA)’s first day change of 38% its universe of comparable companies shrinks to Microsoft and Amazon with first day changes of 33.3% and 29.7% respectively. Twitter and Facebook stand on the two extremes of this spectrum with respective first day changes of 72.7% and 0.6% and hence can be excluded from our analysis.
A look at Microsoft and Amazon’s percentage change for first year should give us an idea of what is to be expected of Alibaba Group Holding Ltd (NYSE:BABA) by the end of year. The figures show that Alibaba Group Holding Ltd (NYSE:BABA)’s ride to the mountains has just begun and that this car is not running out of gas anytime soon. Microsoft and Amazon showed whooping first year changes in stock price of 239% and 298%. Hence, there is still plenty of juice left in Alibaba Group Holding Ltd (NYSE:BABA) by these standards.
The Options Actions trader did warn though that on a three year basis most IPOs underperform the market and the tech companies that he picked out provided some exceptional results. With Alibaba Group Holding Ltd (NYSE:BABA)’s credentials however, it might not be too much of a stretch to compare it to the likes of Microsoft and Amazon.
Video Embed Size: 530 X 298 640 X 360
Let Warren Buffett, David Einhorn, George Soros, and David Tepper WORK FOR YOU. If you want to beat the low cost index funds by an average of 6 percentage points per year look no further than Warren Buffett’s stock picks. That’s the margin Buffett’s stock picks outperformed the market since 2008. In this free report, Insider Monkey’s market beating research team identified 7 stocks Warren Buffett and 12 other billionaires are crazy about. CLICK HERE NOW for all the details.