Alibaba Group Holding Ltd shares fell below their initial public offering (IPO) price for the first time, as China's stock plunge spooked the global markets.

The e-commerce behemoth tumbled 3.5 percent to close at $65.8 on Monday in New York, falling below its September issue price of $68, while the S&P 500 and the Dow Jones Industrial Average slid 3.9 and 3.6 percent respectively.

More than $120 billion market value has evaporated since Alibaba's shares hit a record high of $119.2 in November. Since then, the stock performance has been plagued by news of weakened Chinese economy, its hiring freeze and alleged negligence on counterfeits and bogus transactions among Taobao vendors who wished to boast sales volume to gain prominence.

Alibaba pledged to buy back as much as $4 billion of stock over the next two years, announced the company earlier August, as it moves to offset dilutions from compensation programs and restore investors' confidence.

The buy-back plan came as Alibaba posted its quarterly sales that grew at the slowest pace in at least three years according to Bloomberg. The company's revenue rose 28 percent to 20.2 billion yuan ($3.2 billion) in the three months ended June.

Alibaba was not alone in the rout, as another US-traded Chinese e-commerce company Jumei International Holding sank 15.7 percent on Monday and JD.com 4.5 percent. Search engine giant Baidu retreated 7.7 percent. Social network platforms Momo and Renren edged down more than 9 percent.

China's benchmark Shanghai Composite Index opened 6.4 percent low on Tuesday, after diving 8.5 percent on Monday, marking its biggest drop since 2007. The gauge traded at 3,113.55, down 3 percent as of 10:35 am.