As Alibaba was preparing to sell shares to U.S. investors for the first time, Jerry Verseput tried to persuade his clients not to throw money at the giant China-based e-commerce company because he thinks IPOs are a gamble, especially those with a lot of hype. “I said if you want to go play with the money, I will do it for you but understand this is for entertainment purposes and not an investment strategy,” said Verseput, president of Veripax Financial Management in Folsom, California, who manages about $65 million. For the two clients that insisted on buying stock, Verseput made sure they only invested less than one percent of their assets in the initial public offering (IPO). That was probably good advice. Six months after Alibaba’s IPO, the shares are down more than 29 per cent from their November high. Alibaba opened on Sept. 19 at $92.70, ended its first day at $93.89 and reached its peak on November 13, when it hit $120. The stock closed Tuesday at $84.50, about 24 per cent above the $68 IPO price. Alibaba, which already commands 80 per cent of the Chinese market and handles more ecommerce than Amazon and eBay combined, trades at a price-to-earnings ratio of about 30, compared with Seattle-based Amazon, which sports a three-digit P/E. A lock-up period expires today allowing insiders owning a total of 437 million Alibaba shares to sell. A larger lock-up of more than a billion shares held by insiders, including Yahoo! expires in September. Some investors are worrying about further drops in the stock as insiders sell. At TD Ameritrade, which typically serves retail investors, more than half of those who bought shares of Alibaba at the IPO still own the stock, while 24 per cent sold within a month of buying. “It’s been ugly,” said Alan Haft, a Newport, California-based financial adviser who said he “shamefully went on CNBC touting the stock” before the IPO and talked about a dozen of his clients into buying it. He says he still sees a good long term picture for Alibaba, but not right away. “The stock is probably going to get worse so in the short term it’s a regret.” While some anticipate a small drop in the stock price later today, many analysts believe the end of the lockup has already been priced in. And given Alibaba’s size, any selling will get absorbed easily, said Gil Luria, managing director of equity research for Wedbush Securities. The 25-day average trading volume for Alibaba is 14.5 million shares. Still, the 437 million shares that go on sale today exceed the 368 million sold in the IPO. And some investors have come back down to earth after seeing its most recent quarterly results. While non-GAAP net income, which strips out exceptional items, rose 25 per cent to 13.1 billion yuan (HK$16.3 billion) in the quarter ended December 2014, investors zeroed in on disappointing sales growth: revenue rose 40 per cent from the previous year, down from a 53.7 per cent gain in the September quarter. Alibaba’s underwhelming holiday quarter performance and a public verbal tussle with a powerful Chinese industry regulator helped trigger the stock’s decline. They brought to the fore two major risks to further gains: politics and the shift to mobile commerce. The lower-than-expected December-quarter revenue underscored how Alibaba earns less on smartphones and tablets as its users shift toward mobile shopping. Several of the biggest hedge fund managers, including Leon Cooperman’s Omega Advisors, David Tepper’s Appaloosa Management and Barry Rosenstein’s Jana Partners LLC sold their stakes in Alibaba at the end of last year, while others reduced their holdings, according to U.S. regulatory filings. Other money managers, like Haft, expect more rockiness in coming months, but think Alibaba will make them money. “I think in the longer term Alibaba is going to be a more credible company in the international market,” Haft said. “It will take another six months to a year for the stock to cycle back, but I think the fundamentals of the company are strong.” September’s lockup of 1.6 billion shares could have a bigger effect on the stock. Robert H. Christie, an Alibaba spokesman, declined to comment. As for Verseput’s two clients, they’re hanging on. “They are thinking it’s a big company and 20 years from now it should be a good investment,” he said.