How to Buy Alibaba (BABA) Stock

With its dominance over the Chinese market and plans to continue expanding abroad, Alibaba is one of the largest e-commerce conglomerates in the world. Investing in Alibaba can provide you with a simple way to increase your portfolio’s international exposure and invest in a rapidly growing, massive company.

Interested in investing in Alibaba or learning more about how to buy stocks? Our guide for beginners will help you get started. We’ll introduce you to a few of our favorite brokers, help you compare order types and get started placing your first buy order. 

How to Buy Alibaba (BABA) Stock

If you’ve ever bought a share of stock before, you probably understand the process for investing in Alibaba. Though the company trades on the American markets as an American depositary receipt (ADR) instead of a standard share of stock, it still trades on the New York Stock Exchange. 

Never before bought or sold a share of stock? Take the following steps to get started. 

Pick a Brokerage

As a retail investor, you cannot buy and sell shares of stock directly from the companies that issue them. Instead, you need to open an account with a broker and place buy orders through the broker’s platform. A broker is a financial service provider that helps you buy and sell investments online. Many brokers operate throughout the United States, so you’ll have your choice between dozens of brokers offering different perks, educational resources, analysis tools and more. 

Interested in learning more about our favorite brokers? Explore a few of the best brokers online below.

Decide How Many Shares You Want

One of the first choices that you’ll need to make when you decide to invest through a brokerage platform involves the number of shares that you want to purchase. Don’t feel pressured to buy a large number of shares right off the bat. Most brokers have left the practice of charging flat-rate commissions behind and many brokers now even offer free trading. Feel free to start with a single share of BABA — you can always invest more later down the line.  

If you have to invest on a very small budget and you can’t afford an entire share of BABA, you may want to consider investing with a fractional share. As the name suggests, fractional shares involve partial shares of stock. Most investors allow you to buy and sell major stocks with as little as $1 in your account. You can also set a budget for your investment and invest in fractional shares using a dollar amount as a base.

Choose Your Order Type

After deciding how many shares you’d like to purchase, you’ll need to select which type of order you want to use to buy BABA. The type of order that you choose will play a major role in when your order is filled and the price you pay for your investment. Some of the most common types of orders include the following: 

Market order: A market order executes quickly at the current market price. For example, if shares of BABA trade at a market rate of $215 per share, you can expect to pay around $215 per share when you invest with a market order. Market orders give you little control over the price you pay per share but allow you to ensure that your order is filled as quickly as possible.

Limit order: A limit order allows you to tell your broker that you only want to buy a select number of shares of stock if it’s possible to purchase them at or below a certain price. For example, if shares of BABA trade at a current price of $215 per share, you might set an order to buy a share with a limit price of $210. If your broker fills the order at or below a price of $210 for the share, it will. If the price rises above the price of $210, the broker will not fill the order.

Trailing stop order: A trailing stop order tells your broker that you want to invest in shares of a stock if the price of the stock rises above its lowest price by a set percentage or dollar amount.

Depending on the broker you choose, you may be able to use more complicated types of orders when you buy and sell shares of stock. 

Execute Your Trade

After you’ve placed your order, you can sit back and relax — your broker will fill your order on your behalf according to the specifications you placed in your order. From here, 1 of 2 things can happen.

Your broker can fill the order. If your broker is able to finish filling your order, you’ll see your shares in your account. Most brokers will also send you a notification via email or text message when your order is finished.

Your broker cannot fill the order. If your broker is unable to fill your order (for example, because the limit price was never reached) they may cancel the order at the end of the trading day. Some brokers also allow you to select an option to leave the order open for up to 90 days when you place your initial order.

The time when your order closes will vary depending on the type of order you place and current market conditions. 

Top Online Stock Brokers

Alibaba Stock History

The Alibaba Group is a Chinese international conglomerate specializing in retail, internet services and tech development. Founded in 1999, Alibaba offers a very wide range of consumer and business services administered through a series of online web portals. Alibaba is currently one of the largest e-commerce companies in the world. 

Alibaba held its initial public offering (IPO) in September of 2014 and raised $25 billion, giving the company an estimated valuation of more than $230 billion. To date, this has been the largest IPO in the history of the New York Stock Exchange. Since this time, interest in Alibaba’s many web and financial offerings have grown. The price of the stock peaked at an all-time high of $319 in October of 2020. 

In 2021, Alibaba continued a general downward trend which has continued into 2022. Increased fuel prices and supply chain stoppages have hampered large retailers like Alibaba, bringing its stock below $100 in the summer of 2022.

Pros to Buying Alibaba Stock

Though Alibaba’s stock prices have fallen since the all-time high reached in October, the company’s dominance over the online retail space continues to be impressive. Alibaba’s largest online marketplace, Taobao, is home to 7 million sellers and continues to dwarf competing online merchant websites like eBay due to its sheer size.

Alibaba has beat its past 4 consecutive earnings estimates and revenue has continued to compound due to online shopping increases after the onset of the COVID-19 pandemic. Servicing 80% of China’s massive market, Alibaba’s market dominance makes it nearly impossible for competing e-commerce sites to compete.

Even though the firm’s stock has been falling over the past 2 years, it is still one of the largest retailers in the world and serves a massive market with a huge middle class that will shop with it frequently—think of Alibaba as the Amazon of China.

Cons to Buying Alibaba Stock

When you invest in BABA, you don't actually purchasing shares of Alibaba stock. Due to Chinese laws and trading regulations, you must purchase Alibaba by using the company’s ADR listing on the New York Stock Exchange. This means that investors who purchase ADRs in Alibaba do not receive voting rights and cannot vote on the direction that the company takes in the future.

In addition to not actually owning a portion of the company, Alibaba currently faces challenges penetrating markets outside of China. Its integration into the U.S., in particular, is low, and the company has recently attracted negative media attention from users claiming that its e-commerce sites are rife with counterfeit items.  

Moreover, Chinese regulators are very quick to act and often take severe measures to regulate the Chinese economy. This could cause the value of Alibaba stock to fall for seemingly no reason, often taking investors by surprise.

Investing in Alibaba

If you’re an investor searching for a strong and steady way to invest in the growing e-commerce market of Asia, Alibaba might fit your portfolio. However, it’s important to remember that any type of asset can decrease in value at any time. Never invest more money than you can afford to lose into a single asset and always diversify your portfolio with total market investments.   

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