Tuesday, September 23, 2014

Wall Street's Biggest Pump and Dump

Wall Street: +$9   billion profit. 
ETraders:    -$1.7 billion loss(so far)

Wall Street made a $9 billion profit to hold Alibaba stock for 3 days (pre-IPO)
Insiders: $Priceless:

The IPO priced at $68/share for Wall Street firms that were (over) allocated shares prior to the opening.

The stock opened at $99 on Friday and closed at $94 (below).

The Volume Weighted Average Price (VWAP) at the end of the day (blue line below) was $93.

Wall Street made 93-68 * 367 million shares = $9 billion (not including underwriting fees). Friday's volume was 272 million so we can safely assume that most of the Wall Street allocation was flipped on the first day. 

Currently the stock is ~$86.8 which is $6 below Friday's average price, so based upon the 272 million shares turned over on Friday, Etraders are down $1.7 billion so far...