When we quickly browse business news websites, we will surely find that one of the hottest issues is the launch of Alibaba(NYSE:BABA) in U.S. Stock. Not surprisingly, the share price of BABA soared on September 19-the first day of its launch. While most of the analysts and the shareholders focused on the closing price, however, an inflection point is worth attention as well.

We can see in the graph that at about 12:00 pm on Sept. 19, the share price once dropped to near 89 dollars, which is even lower than its opening price. The phenomenon catches my attention: why the price could not keep going up? Why it turned to be stable despite of obstructions? Firstly, we need to know about a mechanism of controlling stock prices called Greenshoe. As underwriters have access to strike price at low stage compared with issue price, they could actually control the high price by selling parts of their holdings as well as gaining profits. That’s why we can see a fall-back of BABA at about 12 o’clock. Similarly, they repurchased shares at a relatively low price to prevent an underpriced price.

Obviously, it is a complicated process of a launch in stock market, thus we have to lucubrate to get further analysis.

Citation:

1.”Greenshoe via Wikipedia”
http://en.wikipedia.org/wiki/Greenshoe

2.”The Market Value of BABA Exceeds 230 Billion Dollars “. Tech Sina. Sept 20, 2014
http://tech.sina.com.cn/i/2014-09-20/04189626968.shtml