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Twitter IPO could set tone for an Alibaba listing

Logo of online shopping portal Alibaba.com
Aaron Tam | AFP | Getty Images
Logo of online shopping portal Alibaba.com

Twitter's performance following its initial public offering (IPO) could be watched closely by Alibaba as the Chinese tech giant deliberates whether to list its shares in the U.S. or Hong Kong, analysts say.

Social networking website Twitter on Wednesday priced its IPO at $27 per share, above the original expected range of $23 to $25. It starts trading on the New York Stock Exchange later on Thursday.

(Read more: Twitter IPO prices at $26 per share above estimates)

For Alibaba, a Chinese e-commerce platform set up in 1999 by billionaire Jack Ma, Twitter's listing is expected to act as a barometer of investor appetite for technology shares at a time when talk of a bubble in the tech sector has resurfaced.

"We don't know yet where Alibaba will list and exactly when, but let's assume that the IPO will go to the U.S. and that it will happen early next year – in this context the performance of Twitter will basically set the tone of the short-term IPO market," said Stephen Sheung, vice president and investment strategist at SHK Private in Hong Kong.

(Read more:Twitter to debut amid signs of wear in market)

Alibaba has been preparing for an IPO in the months ahead in a deal that analysts say could value the company at more than $100 billion.

In October, Alibaba received the thumbs up from the New York Exchange and Nasdaq to list its shares in the U.S.

(Read more: Dr Doom: We're in a tech bubble)

Hong Kong meanwhile rejected Alibaba's IPO in September because of the tech firms' wish to keep a shareholder structure in place that went against the stock exchange's rules. But press reports in recent days suggest both sides may be willing to reach a compromise to allow Alibaba to list in the Asian financial hub.

"If we see a good response from investors after tonight for Twitter then that would draw a lot of attention from Alibaba that internet stocks are still very popular among U.S. investors," said Jackson Wong, vice president at Tanrich Securities in Hong Kong.

(Read more: Why the Alibaba IPO is more important than Twitter's)

Twitter's IPO has attracted a great deal of focus and some analysts say the company's shares could face a testing time in the months ahead.

"Everyone's smart in a bull market. The IPO market is frothy and I expect Twitter to do well," Brian Hamilton, chairman at Sageworks, a financial information firm, told CNBC Asia's "Cash Flow."

"But the value of Twitter is really rich and that's where the risk is to me," he said.

SHK's Sheung said that while Twitter and Alibaba were different businesses, there were some important links to be made.

"Twitter is likely to do well and if that lifts sentiment in the tech sector that is good for the Alibaba case," he said.

"The thing is Alibaba has much more solid earnings and a much more solid business model financially and operationally than Twitter has. So you can have good sentiment towards something that is less solid and it sets the stage for something that's better and more prudent to do well," he added.

Alibaba CEO Jonathan Lu said recently the firm expects to triple the volume of transactions on its marketplaces to about 3 trillion yuan ($490 billion) by 2016, overtaking Wal-Mart as the world's biggest retail network.

— By CNBC.com's Dhara Ranasinghe; Follow her on Twitter @DharaCNBC

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