How Will The Lockup Expiration Affect Alibaba's Stock? Stifel's Scott Devitt Answers

Shares of Alibaba Group Holding Ltd

were trading up on Tuesday on back of the stock being upgraded by Stifel Nicolaus analyst Scott Devitt to a Buy from hold with a price target of $99. Devitt cited subsidizing of regulatory risks concerning counterfeit items as the reason for the upgrade. He was on CNBC recently to discuss how the lockup expiration of Alibaba's shares will affect the stock. It's A Coin Toss "In my experiences in several lockup expirations of higher profile internet companies, it's a coin toss by the time you get to lockup expiration as to what happens," Devitt said. "It depends on how much supply hits the system and these things are all very well advertised on going into the lockup expiration." Appealing Valuation He added, "I think what's more appealing is the several factors that are somewhat transitory in nature that have been affecting the stock in the past several weeks and months that I think has led to a much more appealing valuation, which is what we are more focussed on and less so the [claiming] of the lockup expiration." Can It Be A Non-Event? Devitt was asked if he thinks that the lockup expiration can be a non-event. He replied, "It could be. It's a coin toss, which to us is not what this call is about. I think, it's as likely that it goes up as it goes down in terms of it depends on the supply that comes tomorrow, but what's interesting is you have a dominant franchise in China, 80 percent market share of e-commerce that now trades at 25 times its earnings."