Tag: Alibaba

  • Alibaba Stock Could Deliver Strong Growth in 2020

    Alibaba Stock Could Deliver Strong Growth in 2020

    Alibaba Stock Could Deliver Strong Growth in 2020
    The economic environment is encouraging, the company is paying attention to its development, there is no reason to think that BABA isn’t able to deliver a strong growth next year.

    Alibaba stock could deliver strong growth in 2020 valuing the company’s fundamentals. This company has a big challenge to surpass eventual issues due to the trade war between the US and China. But it looks like a possibility of “phase one” trade agreement is just around the corner.
    Reversing tariffs on both sides, which will be included in phase one, should boost consumer demand in China. Boosting demand should increase the sympathy for BABA stock. 

    The company has recorded a 40% year-over-year revenue growth in the latest quarter. Also, the results for the past several quarters were good. In the cloud segment, it had 64% growth year-over-year.

    This put together, make Alibaba stock a strong buy for 2020. And here is why.

    The economic environment is encouraging for Alibaba stock

    The most difficulties of trade are behind two countries now, since phase one of the trade war deal is completed. The fact is that 2020 is an election year in the US and no one wants to upset the voters.

    On the other side, the fact is that China’s economy is slowing. Well, yes, but its GDP is increasing by 6% in the 3rd quarter. Moreover, retail sales jumped 8% in November, which is the sign that  Chinese citizens have increased consumers’ demand based on better personal financial status. 

    Moreover, Nike’s (not only Nike’s but also some other US-based companies) sales in China jumped 23% in the last quarter, so Chinese buyers like to spend money on high-end products. This is a good sign for Alibaba too.

    With the rollout of 5G mobile e-commerce could increase even faster which is also important for Alibaba. So, Alibaba stock could deliver strong growth in the year ahead.

    Alibaba improves algorithms to sell ads

    Alibaba earns by selling ads companies and apps. It has adjusted and improved algorithms that help companies sell to buyers. For example, it improved desktop paid-search ranking algorithms, mobile monetization app, and desktop search personalization.

    Alibaba’s New Retail business

    Alibaba points to its brick-and-mortar stores as a “new retail” business. It unites those stores with the company’s direct sales. Alibaba’s core commerce revenue grew by 40% per year to $14.2 billion last quarter. Due to the acquisition of NetEase’s Kaola e-commerce, Alibaba’s “other” of the total revenue increased by 125% to $2.5 billion.
    Also, Alibaba’s core commerce revenue only grew 29% annually which indicates that the company more dependent on the growth of its brick-and-mortar stores.

    Alibaba stock

    Since the first news of trade tariffs, more than a year ago, BABA had lower price growth of the stock. But its twelve-month revenue has increased by 70%, while earnings per share have increased by 135%, during the same period.
    Completion of a “phase one” trade deal should give an immediate boost to Alibaba stock and grow the investors’ opinion of the company. Alibaba could reach a $10 billion annual revenue by the end of next year. This would improve Alibaba’s stock.
    The company continues with a stable stock growth. Analysts foresee its revenue to rise 29% and earnings to rise 23% next year. That is the extraordinary growth rate.

    However, investors should be conscious that Alibaba’s main business is depending on lower-margin operations, to push its top-line growth. 

    Alibaba’s core wholesale commerce business is sustaining the record strong growth. Alibaba’s revenue growth has been superior in comparison with JD.com, its main rival in China. So, Alibaba stock could deliver strong growth in 2020. Keep an eye on this stock.

  • Alibaba Stock is Attractive for The Long Term Investment

    Alibaba Stock is Attractive for The Long Term Investment

    Alibaba stock is attractive for the long term investment
    Analysts have called e-tailer Alibaba Group Holding Ltd “Amazon of China” and for good reason.
    Alibaba is one of the few e-commerce companies in the world that can come close to Amazon’s size and growth potential.

    By Guy Avtalyon

    Update 08/11/2019: Alibaba stock (NYSE:BABA) broke out the  $185 level and scored the high. Yesterday it was traded at $186.66.

     

    Alibaba stock was traded on Tuesday, November 5 at $182,00 which means that it needs to rally less than 2% to reach $185, the new maximum this year. The best Chinese stocks need to clear one crucial level to be able for a breakout. It is $185 level, a very important level that might give it the strength to move up and hit the $210 the highest price ever got in 2018.

    Over the last almost a year and a half we can notice a range of higher lows, so we can easily say it is positive. Yes, but we can also see a set of lower highs. If Alibaba move over $185 that will be a new high and good level for increasing to the $210, historically highest high. 

    It will be interesting to watch this stock over this month.

    Is Alibaba able to do so?

     

    Alibaba reported Q3 earnings on November 1. All expectations are beating because the company reported an incredible increase in sales. The online-retail business rose an awesome 40% year over year in the September quarter. 

    But that’s not all. The real rise will come on China’s Singles Day on November 11. That is a shopping storm. The original aim of this holiday was dedicated to single people to celebrate not being in relationships. But it turned into something like Black Friday but more huge, more intensive, a real shopping storm. Today it is an indicator of buyers’ sentiment and sales growth. Can you guess who played the big? Maybe the biggest role in turning this holiday to insane shopping of everything has Alibaba.

    Singles Day began as a weird celebration for single people in China back in the 1990s. Just write November 11as numbers only. It is 11. 11, right? Singles Day started as a kind of anti-Valentine’s Day when students at Nanjing University began celebrating the fact they are single.

    After 10 years Alibaba literally adopted that day and turned it in a day when everyone, no matter single or not, orders themselves a gift.
    Online shoppers in China made $30.8 billion in sales last year on that day. This spending orgy has surpassed Cyber Monday in the US for online shopping made on a single day.
    Since last year’s score was 27% higher than a year ago, what can we expect this year? We are afraid that any forecasts will be beaten. Have in mind that Alibaba made a billion dollars in sales in the first 2 minutes shopping (actually, it needed only 90 secs). A real retail phenomenon! And Alibaba is a recorder.

    Alibaba.com (NYSE:BABA) is the biggest e-commerce and cloud player in China.

    In its Q2 earnings report, we can see its revenue increased by 40% annually to $16.65 billion v.s. estimated $180 million.

    Company’s generally accepted accounting principles or GAAP net income, include a big profit from its stake in the fintech company Ant Financial, which rose 288% to R$9.9 billion, which is $3.85 per share. If we exclude that profit and some others, the net income increased 40% $4.58 billion, or $1.83 per share. Estimations were beaten again.

    After the Q2 earnings report the stock price jumped but for a short probably because of investors’ worries toward the U.S.-China trade war. Also, the economic slowdown in China had an influence.

    Should you enter a position in Alibaba?

    Alibaba’s focus commerce revenue grew 40% annually, its operating profit rose 32%, preserving its position as Alibaba’s entirely profitable venture.
    There are some concerns about the Chinese economy’s slowdown.

    Should you invest in Alibaba stock?

    Revenue growth of 40% is an amazing amount for a company of virtually any volume. But keep in mind that Alibaba is the world’s seventh-most valuable public company. So, that percentage is a miracle. 

    The number of their active consumers increased by 19 million last quarter and now they have 693 million users. They have 785 million mobile monthly active users, which is 30 million more over three months. Alibaba aims to have more than 1 billion buyers by 2024, and it looks like it will reach that goal.

    How to invest in Alibaba

    The best way to invest in Alibaba wisely is by having a long horizon. The company has a fantastic position, its strength in e-commerce is supported by its huge data insights on Chinese buyers, also its increase in market share in the cloud computing industry.

    Also, there’s the Chinese growing middle class with increased buying power. The extra income has proven to be important to Alibaba’s continued high growth. Also, there is the Chinese government as a safety net. China supports its favorite companies on the international stage, that’s a fact. Protectionism from the Chinese government works fully in favor of BABA stock, backing it to enter the “buy” choice.

    The drawbacks of Alibaba stock

    The founder, Jack Ma,  stepped down as chairman of the board in September this year. That is a signal the risk is here. What lies behind the company’s founder and former CEO leaving?  The other problem is an extremely high bar the Alibaba set for itself.
    The risk is that this growth will decelerate. But at what speed? The analysts predicted speed or it will be due to a quick sale by growth investors?

    Will Alibaba’s success continue?

    The company has one of the most advantageous competitive aspects.

    Alibaba’s large market share in plenty of high-growth, scalable, tech-based fields makes it dominate in the coming years. But something must be taken into consideration. China has a great impact on the company, honestly too great. China’s government’s influence is a risk by itself. The additional risks may come due to the trade war. Just compare Alibaba”s valuation to results they have in the last few quarters and you will conclude that investors are paying attention to the trade war.

    Alibaba stock trades at 32 times earnings. Is it in line with revenue growth of 40% and earnings per share increased by 36 %? It’s low multiple. Maybe that’s not a wonder, with shares trading lower than they did 18 months ago. Buying Alibaba stock is a calculated risk and one that could pay very soon if the trade war ends.