Alibaba shares Looking Beaten Up As Lockup Period Expires

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By J Maslow

alibaba app on iphone
Close-up shot of Apple iPhone 5S with Alibaba online store application on screen.

With 429 million shares about to be eligible for trading in the open market, a lot of market observers are taking a close look at Chinese e-commerce giant Alibaba (NYSE:BABA). Alibaba’s stock hasn’t been doing all too well after its much-hyped IPO. In one of the biggest IPOs in 2014, Alibaba opened at $92.70 and reached its peak in November 13 when it hit $120. Ever since then, the company has been trading down from its peak. It is still trading with a hefty gain from its $68 IPO price. As of this writing, Alibaba’s stock is trading at $84.47.

A lot of shareholders are worried with over 400 million Alibaba shares ready for trading as its six-month lockup expires. This is going to put tremendous pressure on Alibaba’s stock. This is a well-placed concern. After all, Alibaba is facing all sorts of regulatory allegations, not just in the United States but in China as well. Just like with any kind of stock that has seen massive appreciations, shareholders are always looking for an excuse to unload. There is no shortage of reasons to unload this stock. The future seems quite uncertain, and the company actually still looks quite overvalued.

Regardless, don’t let appearances fool you. As a long-term play, Alibaba is a good stock to pick up. If I were looking to trade Alibaba, I would hope that the price does implode due to the lockup expiration and buy it at a steep discount. It is still not out of the woods yet, and the bottom might still be a long time to come. Regardless, given this market’s fundamental strengths, it is worth waiting for.

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