Alibaba Readies Additional Offering to Meet Share Demand

The transcript discusses the strong demand for a particular IPO, highlighting its oversubscription and the 100% hit rate in one-on-one investor meetings. It explains the mechanics of overallocation, where underwriters issue more shares and buy them back at the IPO price, profiting only if the shares rise. The IPO is compared to major companies like Facebook, Baidu, Tencent, and Amazon, noting its valuation and associated risks, such as corporate governance and China-related uncertainties. Concerns are raised about the NYSE's ability to handle such a large IPO, especially on a quadruple witching day.

What is a 'mega deal' in the context of IPOs?

• An IPO valued at $1 million or more

• An IPO valued at $5 million or more

• An IPO with a 50% hit rate in investor meetings

• An IPO with a 100% hit rate in investor meetings

How do underwriters make a profit in an IPO?

• By issuing fewer shares than the offering size

• By buying back shares at a higher price than the IPO price

• By holding shares until the price drops

• By selling short and buying back at the IPO price if shares rise

Which company is mentioned as having a high price-to-earnings ratio?

• Baidu

• Tencent

• Facebook

• Amazon

What are some risks associated with the IPO discussed?

• Lack of investor interest

• Technological challenges

• Corporate governance and China-related uncertainties

• High competition in the market

What concern did an underwriter express about the New York Stock Exchange?

• Its ability to attract investors

• Its ability to handle small IPOs

• Its ability to handle an IPO of this size

• Its ability to set accurate pricing