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How Is Alibaba's U.S. Versus Hong Kong Listing Doing?

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Alibaba is a Chinese e-commerce giant and the country’s top cloud computing provider. While online businesses have seen strong performances amid the coronavirus pandemic, Alibaba’s stock price took a hit due to the outbreak. The stock was strong at the beginning of 2020. Alibaba has been in the news lately. The company is in talks to invest $3 billion in Grab Holdings, which is a Southeast Asian ride-hailing firm. 

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Alibaba's stock price history on the NYSE

Alibaba got listed on the NYSE on September 19, 2014. Since then, the stock price has risen by 190 percent. However, the rise hasn't been steady. Alibaba stock has witnessed a lot of volatility. The stock surged by 76 percent within two months of its IPO. 

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In 2015, the stock price saw a decline of 22 percent. One of the major reasons for this skid was the surfacing of macroeconomic worries around the Chinese economy. The Chinese economic growth had slowed down significantly. Moreover, the Chinese stock market was getting beaten. As Alibaba’s bulk of the business is in China, these worries hit the stock hard. 

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In 2016, Alibaba stock climbed by a modest 8 percent compared to the gains of 9.8 percent seen by the S&P 500 during the same period. However, 2017 turned out to be very good for the stock and it climbed 96 percent. Alibaba’s CEO provided the company's forecast. The future plans sounded very impressive during the company's June conference call, which led to the largest single-day spike in the stock of 13 percent.

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Alibaba’s volatile stock price performance

Alibaba stock declined by 21 percent in 2018 and rose by 55 percent in 2019. The broader slowdown in China and trade tensions were responsible for Alibaba’s drop in 2018. The company also missed its earnings estimates and had to cut its guidance, which led to weak investor sentiment. In 2019, the company's strong second-quarter report dispelled fears of a trade war-related slowdown. The stock offering in Hong Kong in November 2019 also propelled its American Depository Receipt (ADR) in the U.S. So far, 2020 is turning out to be equally volatile for Alibaba. Overall, the stock has risen by 28 percent. 

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Alibaba's stock price history on the Hong Kong Stock Exchange

Alibaba went public on the Hong Kong Stock Exchange (HKSE) in November 2019 amid a strong debut. Previously, the company skipped Hong Kong to list in the U.S. due to the HKSE’s restrictions on companies with unconventional voting rights. The value of one ADR of Alibaba is equal to eight Hong Kong-listed shares. 

Alibaba’s stock price in Hong Kong has risen by nearly 54 percent since the listing. On the first day of trading, the stock rose by 7 percent and closed at 187.60 Hong Kong dollars, which was higher than its IPO price of 176 Hong Kong dollars.

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About 35 percent of the gains have come in the last two months. One of the key reasons for investors’ optimism for Alibaba’s Hong Kong listing is the Ant Group’s upcoming IPO. Ant Group is an Alibaba-backed fintech company that owns the digital payments platform, Alipay. Ant Group will go public on the HKSE and in Shanghai. 

Gap between Alibaba’s U.S. and Hong Kong listing

Over the last two months, the gains in Alibaba’s U.S. ADRs have been relatively smaller at 21 percent. Therefore, the recent rally in Alibaba’s Hong Kong shares has created an arbitrage opportunity for investors. 

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