How to Buy Alibaba Shares

With September fast approaching, the most impending concern among average investors like you and me is how to buy Alibaba shares .  It is possible for affluent investors, those who own hedge funds or the few financial heavyweights, to book the number of shares they want to buy prior to the IPO date. However, investors like us don’t have that option, yet we still want to be part of the dragon from Hangzhou when it roars.

The world is full of options, and so do we! Thus, even the average John and Joe will be able to buy alibaba shares. Here are a few ways of how to be part of the IPO when it opens:

The Alibaba IPO

Will Alibaba shares show in red or green?!

If you want to buy Alibaba Group Holdings (pending BABA) shares on the IPO day, which is not the best option for you anyway, you will need a discount broker.

How to choose a broker is a lesson for another day; however the features to look for include good customer service, no fee dividend reinvestment, and a variety of research tools for customers.

Notify your broker of your interest in the BABA stock (Alibaba shares), and the number of shares you will be willing to buy. In other cases, you would be required to specify the price you are willing to pay referred to as the call a limit order. But in this case, you’ll buy alibaba shares at the market, which means you pay the IPO price for the stock.

Investing in Alibaba shares after the IPO

It is often difficult to buy shares of any company on its IPO day.  And even those who succeed get burned along the way. As witnessed in many cases, companies that see their share price rapidly hike in their IPOs, flop afterwards.

An example of such stock is Groupon (GRPN). Conversely, a disastrous IPO doesn’t always mean the end as demonstrated by some companies, for instance Facebook  Inc. (FB). The social media giant’s IPO was awful that it took the stock over a year to trade above its offer price, but after recovering it is doing spectacularly well.

After alibaba’s debut, the stock will become very volatile.  A small hint may send the stock in panic mode and shares will plunge. That’s the time to buy. Conversely, the share price may remain high and if that should happen, which is very likely given its sky-high valuation, you will have to pay the price of missing out on its IPO.

How to Buy Alibaba Shares Indirectly

You want to mitigate your risk, so you shy away from alibaba IPO. In your heart, you don’t want to miss out on the benefits that this IPO will bring. If you think you don’t have an option, you are damn wrong. There are a number of ways to benefit from a successful alibaba IPO. Indirectly investing in the stock can help investors alleviate the risk associated with it. Such indirect investments include:

Investing in other Stocks

There are companies already trading in the stock market that are directly related to alibaba. For instance, Softbank  (SFTBF) and Yahoo  (YHOO) are alibaba’s two biggest shareholders. The two companies own 37% and 24% of alibaba stake respectively. In the past couple of weeks, you have seen the two stocks register significant appreciation. This is because risk-averse investors opt to invest indirectly in Alibaba shares by choosing them. Investing in the two companies will enable you to enjoy a piece of cake from a successful alibaba IPO, albeit small.

Investing in ETF

Exchange Traded Funds offer great alternatives as they hold assets such as stocks, bonds and many more. IPO ETFs add companies as soon as they make their debuts. Here are the possible options:

• Renaissance IPO ETF  (IPO): Adds new companies on their 5 th day of trading and holds them for two years. It is a guarantee that Alibaba will be part of the ETF.
• First Trust’s US IPO Index Fund  (FPX): If Alibaba share price does not double in its opening day of trading; it may be included in this fund. However, the Chinese giant is expected to roar on its debut, which makes it unlikely to part of this great ETF.
•  KraneShares CSI China Internet Fund  (KWEB): The ETF has just over a year since it begun trading, but has already accumulated over $77 million in total net assets. CNBC’s Fast Money  reported the ETF could add Alibaba after 10 days of trading.

Conclusion

Alibaba has been the most trending stock news in the past couple of weeks. The company may have to wait until the U.S. Labour Day celebrations and the Wallstreet break before it makes its debut in the NYSE.

Everything about Alibaba Stocks is huge and everyone wants to be a part of it, but big cats must have it.  Save yourself the hurly-burly that characterise IPOs. If you wait and buy, you may gain without straining yourself. Alibaba’s share price may double, triple or quadruple in its debut, but you must understand that you a single investor and how to buy alibaba shares is every average investor’s concern. You cannot flex muscle with institutional investors, hedge funds or the big cats. So if you miss out on its debut, exploit the other options and be sure not to miss on the rewards that come with it.