Alibaba Group Holding Ltd (NYSE:BABA)’s shares were priced at $68 per share, with eight considered a lucky number in the Chinese culture.  When asked if Alibaba Group Holding Ltd (NYSE:BABA) seems overvalued at the current price point, Charles M.C. Lee, an accounting professor at Stanford who also cofounded a firm that deals with asian equities says:

“The price point is reasonable compared to valuations of other companies like Facebook and Baidu.  But once the market opens, the price point may be hard to stay there.  Alibaba’s closest competitor in China includes Tencent and Baidu.  We look at Facebook, Google, Amazon and Ebay as comparison.  “

Market cap for the companies are:  Alibaba at $167.6 billion.  Amazon at $150.2 billion.  Ebay at $65.4 billion.  Baidu at $80.1 Billion.  CRM at $35.7 billion.  Alibaba has the biggest market cap of all its peer group.

Some believed the price could of started out at $88.  But $68 gives investors a good feeling that the stock is an in demand deal, and everyone wants to be in this hyped up deal.  This also gives investors confidence that the stock price has a lot of room to grow as well.

Geoff Yang, a redpoint ventures partner, states

“The shares are probably under priced so there’s a pop in the open market and it will generate demand and excitement.  My guess is that you will likely see the shares trade up and it will be a well managed offering. The irony is that when stocks trade down, it looks like a failed offering and he feels that underwriters take that into consideration.”

Alibaba Group Holding Ltd (NYSE:BABA) decided to use the New York Exchange instead of the Nasdaq Exchange due to Facebook Inc.’s (NASDAQ:FB)’s technical trading problems.  They have already pre-tested trading on the exchange to ensure that it can handle the large volume that would arise today.

Cory Johnson feels that at $68 per share, those with pre-ipo shares who were planning to hold on the share may have a fiduciary duty and decide to get out if they see a pop in the price.

Alibaba is priced at 39.6x price to operating profit, compared to Amazon at 32.9x, Ebay at 13.6x, Baidu at 36.0x and CRM at 92.5x.  This shows that Alibaba is reasonably priced compared to its most-compared peers.  Johnson feels the valuation they gave for the company is too high.

Yang says Alibaba wishes to be a global brand, they are transparent, and one of the major platform companies in the coming quarters.  They will soon make major acquisitions with the funds they’ve received.  As a result of them raising expectations, they will start acting that way.  They also have strong global expansion interest.

Lee says he is most worried about two things in Alibaba Group Holding Ltd (NYSE:BABA)’s company.  The fact that one, it’s a growth company and people will expect the company to keep growing.  And second, there are Chinese regulatory concerns.  The Chinese government has to be on Alibaba Group Holding Ltd (NYSE:BABA)’s side.

Investors will be watching the company over the next couple months to see how Alibaba Group Holding Ltd (NYSE:BABA) fairs and whether the company will continue to climb or start to fall.

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