Goodell on the rocks; Fed may lay groundwork for rate hike; Alibaba IPO:The week ahead
The biggest IPO in Wall Street’s history could hit the tape Friday morning. Chinese e-commerce giant Alibaba is set to price Thursday after the close and begin trading Friday morning – it’s arguably the biggest event on next week’s schedule.
“It’s looking like this thing is going to be a blockbuster,” said Yahoo Finance Editor-in-Chief Aaron Task. “Sort of the anti-Facebook IPO.”
When Facebook (FB) IPO'd in 2012, the company boosted its price during its shopping period and increased the number of shares offered. The stock’s underwriters were accused of selective disclosure, telling certain investors information that it withheld from others.
“They tried to jam as much stock out there as possible at a very high valuation,” said Task. Alibaba is different. “On a valuation basis, Alibaba looks very attractive relative to its big competitors. It's selling… cheaper than Amazon (AMZN), Facebook, Tencent and Baidu (BIDU). So it seems like the bankers are being conservative.”
As of right now, Alibaba shares are priced between $60 and $66, but the company closed its order book early on Friday and reports say it may lift the price of its IPO.
“I think there’s a tremendous amount of interest in this stock, and I think it could have a tremendous first day of trading,” said Task.
If the first day of trading goes well, it could be a bigger story than just Alibaba. “The fallout from that [is] there’s going to be a lot of talk about bubbles and things are going crazy. But it could spur… another round of follow-on IPOs.”
Yahoo (YHOO) owns a 23% stake in Alibaba, which will trade on the New York Stock Exchange under the symbol: BABA.
Related: Buying Yahoo to play Alibaba? History hints at future moves
Of course, the stock market is bigger than just one IPO and a major driver of the equity market next week is likely to be the FOMC statement out Wednesday.
“Anybody who wasn’t trying to handicap what price Alibaba opens at next week has been trying to figure out what the language is going to be in the Fed statement,” said Yahoo Finance Senior Columnist Michael Santoli.
“Everybody’s anticipating that because the economic numbers here have been relatively strong for a month or so, with the last jobs report somewhat of an exception, that the language is going to change and perhaps no longer say rates will stay low for a ‘considerable period’ after [the Fed] stops buying bonds in October,” he explained.
This could have an impact on the stock market next week. It’s already having an impact on treasuries. Santoli pointed out that the two-year note, which is very sensitive to Fed Policy, has already started to lift higher.
“There’s room in Yellen’s commentary for… kind of a sigh of relief impact,” he said, if Yellen doesn’t forecast higher rates on the horizon. “She doesn’t have an inflation problem yet. She can still kind of feel like she can be patient until the labor market really does heal further.”
Related: Goodell, NFL in fight to save public image as Rice scandal deepens
If the endless speculation about Fed policy isn’t your cup of tea, and you’re not a fan of massive Chinese IPOs, Yahoo Finance’s Jeff Macke is watching the NFL next week.
“Roger Goodell’s gonna take a fall next week,” he predicts. The NFL commissioner is under massive scrutiny following reports he learned that Baltimore Ravens player Ray Rice punched his wife in June, and criticism that he did not do enough to reprimand Rice. Now that a video of the event has surfaced, the NFL has suspended Rice indefinitely.
“The NFL has an optics problem and they’ve got a whole bunch of corporate sponsors and billions and billions of dollars worth of reasons to make this problem going away,” Macke said.
There’s pressure on the NFL to get the problem solved before October 1st, according to Macke, because of the added scrutiny breast cancer awareness month will bring.
The NFL promotes breast cancer awareness in October through a series of initiatives, including pink player gear. But a report last year from Business Insider showed that only 8% of the proceeds from that go to actual cancer research.
“They have an optics problem when it comes to their relationship with their female fan base. They’ve got a lot of corporate sponsors,” he said.
About 45% of NFL fans and 33% of viewers are women.
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