Focus Shifts To Yahoo As Alibaba Stock Lockup Expires

Alibaba (NYSE:BABA) stock was down on the first trading day after the expiration of a massive stock lockup valued at about $105 billion. The expiration, on Saturday, lifted trading restrictions on 1.6 billion shares, or 64% of shares outstanding. That’s almost five times the amount of shares sold when Alibaba priced its blockbuster initial public offering on Sept. 18, 2014, and started trading the next day.

Alibaba stock was down 3%, near 63, in midday trading in the stock market today.Yahoo (NASDAQ:YHOO), which owns 15.5% of Alibaba, or 384 million shares, is exploring its options. Yahoo in January announced plans for a tax-free spinoff of its Alibaba stake into a separate, publicly traded company in Q4, pending approval by the Internal Revenue Service. Yahoo in February submitted a request to the IRS for a ruling on the tax-free plan, which the IRS denied. But the IRS also indicated that it had not concluded that the proposed transaction was taxable and therefore was not ruling adversely on the request.

Recent comments by IRS officials seem to favor the spin off, and Yahoo stock was up 2%, near 33, in midday trading Monday.

Alibaba founder Jack Ma and Vice Chairman Joseph Tsai have pledged to not sell their shares. They hold a combined 269 million shares, or about 10% of the unlocked stock. Masayoshi Son, chairman of Japan-based SoftBank, in May said his company would hold its 798 million shares, according to a report by Bloomberg.

Alibaba began trading on the New York Stock Exchange a year ago amid much fanfare, becoming the largest IPO ever in terms of money raised — nearly $25 billion. But it’s been a rough year for the stock. Alibaba priced shares at 68. The stock peaked at 120 on Nov. 13 and has been mostly on a downward slide since.

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