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The Alibaba IPO is likely to raise more than the $16 billion that Facebook Inc. (Nasdaq: FB) raised in 2012. Some have even projected a total of more than $20 billion, which would be a U.S. record.
Projections for Alibaba's valuation have continued to rise as well. While many have pegged the e-commerce titan as a $168 billion company, some have valued the company over $200 billion. That includes Piper Jaffray analyst Gene Munster, who just last week valued Alibaba at $221 billion.
But for those who buy Alibaba Group Holding (NYSE: BABA) stock following its public debut, the size of the initial public offering is much less important than the performance of BABA stock.
Of course, there are a lot of factors that contribute to how a newly issued stock performs. To get some perspective on how trading can go, let's look at the performance of fellow monster IPOs Visa Inc. (NYSE: V), General Motors Co. (NYSE: GM), and Facebook…
Alibaba Stock vs. Previous IPO Giants
Visa Inc. currently holds the record for the largest U.S. IPO ever, having raised $19.65 billion in 2008. In the first day of trading, V stock closed at $56.50, which was a 28% gain from its $44 offer price.
While Visa stock did dip in its first year of trading, it has rebounded nicely since the recession of 2008. Investors who bought V stock in its first full-week of trading have banked gains of 235% through today. The stock is up 392% from its IPO price.
General Motors Co. currently holds the No. 2 spot on the list of largest U.S. IPOs after raising $18.14 billion on Nov. 17, 2010. GM stock jumped as much as 9% in its first day of trading, before closing with a 3.6% gain. GM had offered shares at $33 and closed its first day of trading at $34.19.
The GM IPO was a special circumstance because the company had been the beneficiary of a $50 billion government bailout just one year earlier. Before the IPO, the U.S. government held a 61% stake in the company, but the offering brought that total down to 33%.
While the stock sputtered through 2011 and 2012, it has regained considerably. Today, shares are up 9% from their first full week of trading and up 13% from the GM IPO price.
Facebook Inc. held the largest Internet IPO ever in May 2012, raising $16 billion. In its first day of trading FB stock had a modest return of 0.6% from its offer price of $38.
After a rough first year, FB stock has had a nice rally in the last 12 months. Investors who bought in following the IPO have banked a gain of 71% since the stock's first full week of trading. That has easily outpaced the gains by the broader markets in the same time, as the S&P 500 has climbed 46% and the Nasdaq is up 52%. FB is up 72% from its IPO price.
While these three notable stocks have brought investors nice returns since their IPO dates, Alibaba could outperform these companies because of the market it operates in…