Wall Street is abuzz on the eve of the much anticipated Alibaba(BABA) initial public offering. Alibaba is set to be the biggest IPO in Wall Street’s history with the potential to raise as much as $25 billion. While this is exciting news, it’s too soon to consider entering this stock without first some real numbers from earnings and price momentum.
The good news is that you don’t have to buy BABA IPO to potentially profit from the excitement surrounding the listing. Specifically, the BABA IPO is benefitting two trades in Blue Chip and Emerging Growth.
Most notably, Yahoo! Inc.(YHOO) has been making headlines as the company currently owns a 22.5% stake in Alibaba, making it the second-largest shareholder. If the IPO is successful, it would leave YHOO with substantial cash flow. YHOO went from a C-grade hold to a B-rated Buy this week after gaining traction ahead of the IPO.
The fact that Yahoo is maintaining a larger stake generated excitement on Wall Street because Alibaba is believed to have strong long-term potential and value.
In Emerging Growth, our favorite stock is our biggest winner, Vipshop Holdings (VIPS). All of this fuss over Alibaba is good for Vipshop. Alibaba is an Internet retailer based in China. Guess what Vipshop is? An Internet retailer headquartered in China. The company’s sales are forecasted to be up by 123.5% next quarter and earnings forecasted to be up 173.1%. The growth is not done for Vipshop, if anything it’s going to get a second wind.
I will continue to monitor Alibaba because it does have long-term growth potential, but for now the IPO’s impact on current portfolio holdings is stunning and if Alibaba does perform as expected this boost should continue.