Facebook also had a major hiccup on its first day of trading on the Nasdaq, with some traders waiting hours to find out whether orders had been filled. The confusion may have turned some investors away from owning the stock, which rose only slightly above its IPO price on its first trading day and fell below it during the second session.
Alibaba, on the other hand, has chosen to list on the New York Stock Exchange. While there's no proof that the NYSE system is superior, it employs human beings to balance out orders alongside computers.
Rich Repetto, an analyst at Sandler O'Neill, said that the NYSE employs a "pause" before trading begins in an IPO to ensure that orders are balanced. "Nasdaq did not have the 'pause' in the system when they tried to open Facebook," he said. "It was an issue."
Nasdaq has since updated its IPO process to include a human IPO officer who works closely with the deal underwriter. New stocks don't open for trade in a Nasdaq IPO until the underwriter gives Nasdaq the green light.
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All that said, there are some unusual elements of Alibaba's corporate structure that investors should understand before owning the stock. For instance, investors in the U.S.-listed shares won't actually own a stake in the Chinese company, but rather in a Cayman Islands-based holding company that has a claim on the profits of Alibaba.
In theory, the Cayman domicile could be abused because local laws there are somewhat laxer than Securities and Exchange Commission rules. Disclosure of material information, for instance, isn't required as quickly in the Cayman Islands.
In practical terms, a large, high-profile company such as Alibaba is likely to hold itself to a higher standard.Baidu, China's version of Google, is also a Cayman company and hasn't run into any major problems linked to its Cayman listing.
But if the scenario arose in which disgruntled investors wanted to sue Alibaba, the Cayman domicile could make a difference, according to Greg Sichenzia, partner at law firm Sichenzia Ross Friedman Ference. "If things go bad, the claim is against the Cayman company," he said. "For an investor, it could be very frustrating to enforce your rights."
Alibaba's valuation looks reasonable but not cheap. The company's earnings are expected to grow about 30 percent in calendar 2016, based on analyst estimates collected by CNBC. That puts it at a multiple of about 20 times calendar 2016 earnings.
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How does that compare with Alibaba's peer group? There aren't many Internet companies in the world, let alone in China, that have a valuation close to what Alibaba's will be. One possible comparison is Baidu, with a market capitalization of $78 billion. It trades at 18 times consensus 2016 earnings, which are expected to grow 35 percent that year.
While Alibaba has likely avoided a faceplant, investors who buy after the IPO should avoid dreams of instant riches.