Alibaba Turns to New York to Launch New IPO

By Steve Anderson March 18, 2014

While the worldwide economic picture might best be described as uncertain, a new stock boom seems to be in the making, and New York is doing what it can to draw in the firms looking to release stock publicly for the first time. The IPO market is starting to ramp up, and while European and Chinese exchanges are eager to get a slice of that market, the United States is rolling out the red carpet and looking to make itself the capital of the new stock boom, as exemplified by the recent arrival of Alibaba to gain a slot on the exchange.

Alibaba is actually just a small part of a growing movement of companies looking to go public for the first time, and looking to go public on the major United States exchanges, a development proving a source of dismay for the aforementioned European and Chinese exchanges. Just so far this year, according to a report from IPOX Schuster, there have been 42 combined IPOs for the New York Stock Exchange (NYSE) and for NASDAQ. By way of comparison, the Hong Kong Stock Exchange has seen just 13, and the London Stock Exchange only 10. The last 12 months, meanwhile, have only cemented the American exchanges; 238 IPOs were listed on the NASDAQ and NYSE exchanges, while Hong Kong could only muster 99. London, meanwhile, fared even worse at 68.

What's driving the influx of IPOs looking for a listing, meanwhile, is an ongoing bull market for stocks in the United States. While markets in Asia and Europe have been somewhat behind of late, United States stock markets are still well underway. What's more, the United States exchanges allow for a dual-class voting structure, which allows a company to sell non-voting shares of stock. This in turn lets a company raise money while keeping the voting structure comparatively undiluted, a measure of flexibility that's welcome in many corporate boardrooms.

Perhaps even more interesting than this, however, is that the demand for new tech IPOs has resulted in competition within the United States as well. The Facebook IPO proved to be a bit of a blow for the NASDAQ, sufficiently so in fact that the NYSE has started to aggressively court tech IPOs to bring same out of the traditionally tech-heavy NASDAQ. This particular plan was readily seen succeeding as the NYSE managed to garner the Twitter IPO, regarded as the “highest-profile prize” in IPO that year. Additionally, large numbers of biotech stocks also arrived on the exchanges, and made biotech one of the biggest fields in the various exchanges.

The major exchanges are really no different than, say, a streaming video vendor. A company like Netflix isn't so far removed from the NYSE, except instead of the latest biographies and action movies, the exchanges carry stock. The more stock that the exchanges have on hand, the more attention said exchange can garner, and the more investment will flow through that exchange. The added flexibility of a two-class stock system, as noted previously, doesn't hurt either.

It's all about getting stock money into company coffers and giving investors opportunity to get in on stock opportunities in the end, and regardless of what names are selected, companies have plenty of opportunity to get listed one way or another. That so many are turning to the NYSE, however—as well as the NASDAQ—is certainly a noteworthy phenomenon, and one that might well fuel the next generation of big investment.

Edited by Cassandra Tucker

Contributing TechZone360 Writer

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