Stock Watch: Alibaba’s Market Performance

Alibaba Group Holding Limited (NYSE:BABA) is a major player in the world of e-commerce and digital technologies. Originating in China, the company has grown to become one of the largest in the world in terms of both sales and user base, boasting over 500 million users worldwide.

Initially focused on online sales and delivery services, Alibaba expanded its reach in 2003, with the launch of Taobao.com, a widely popular online shopping platform in China. The same year saw the creation of Alibaba.com, a platform dedicated to wholesale trade. Jack Ma, the company’s founder, stepped down as CEO in 2019, but continues to be involved, intending to sell 10 million shares totaling around $871 million through his family trust fund. Obviously, the volume indicator will not miss such a flow and will show exactly how this will happen, significantly affecting the price. The documents submitted to the SEC reveal that JSP Investment and JC Properties funds, part of the trust, will be handling the transaction on November 21.

Alibaba’s reach extends beyond just online sales platforms. It encompasses various services and platforms such as AliExpress, Tmall, Lazada, Cainiao, and Alibaba Cloud, as well as fintech services and cloud solutions. During the Singles’ Day on 11.11, a substantial number of users engaged in millions of transactions through these trading platforms. Interestingly, while the previous year’s financial reporting fueled price growth, this year’s investors displayed skepticism, resulting in a decrease in the share price on the designated reporting day.

Nonetheless, Alibaba’s scale remains a key asset. With a vast user base, the company draws substantial traffic to its platforms. This influx, in turn, enables Alibaba to attract a greater number of sellers and buyers, fostering continuous growth in sales. Recent financial data indicates a robust performance, with a net profit of 27.71 billion yuan ($3.8 billion) for the quarter ending September 30, marking a notable improvement from the previous year. The Taobao and Tmall Group division reported a 4% increase in revenue to 97.65 billion yuan, while the Alibaba International Digital Commerce Group, including Lazada, AliExpress, Trendyol, and Alibaba.com, experienced a substantial 53% revenue growth to 24.51 billion yuan. 

Amidst these successes, the company has made strategic decisions, notably abandoning plans to separate its cloud business into a standalone entity due to uncertainties arising from US sanctions. Alibaba’s earlier intention to restructure its business faced setbacks, with the United States imposing new restrictions on chip exports for AI systems to China.

In March 2023, company representatives unveiled plans for a significant business restructuring, only to have US sanctions prompt a strategic reassessment. Alibaba not only opted against separating its cloud business but also put a pause on the initial public offering of its Freshippo product division. Meanwhile, in September, Alibaba’s logistics division, Cainiao, submitted an application for listing on the Hong Kong Stock Exchange, gearing up to attract foreign investment and bolster international e-commerce endeavors. 

Despite these challenges, positive expectations persist. The company’s stock, currently trading around $78, indicates resilience, hovering around a strong support level. Analysts anticipate a potential return to previous values, with the initial target set at $88 and further aspirations to reach $100. This analysis suggests that Alibaba’s recent management decisions may have mitigated the impact of the decline after the release of the reporting data, positioning the company for a positive trajectory moving forward.

---

Interesting Related Article: “Alibaba allowing US firms to sell on its B2B platform“