Chinese e-commerce giant Alibaba Group Holding Ltd – ADR (NYSE: BABA) took the spotlight Tuesday after detailing a path to 1 billion users by 2024 at its annual investor day and the purchase of a 33% stake in Ant Financial.
Swelling User Base
Alibaba had 860 million annual active consumers as of June 30, including 730 million at its Chinese consumer business, said CEO Daniel Zhang, who recently took over the role of chairman following the retirement of founder Jack Ma.
Alibaba and Ant Financial combined have about 960 million annual active users in China alone, according to the company.
Looking ahead, Alibaba — which operates multiple e-commerce platforms such as Taobao, Tmall, Freshippo and Tmall Super — said it is targeting 1 billion annual active consumers by the end of fiscal year 2024 and annual gross merchandise volume, or GMV, of 10 trillion yuan ($1.4 trillion).
33% Stake In Ant Financial
Separately, Alibaba announced that it has received a newly issued 33% equity interest in Ant Financial following the satisfaction of the closing conditions set forth in a 2014 agreement.
In the process, the company ceded the rights to receive 37.5% of Ant Financial's pre-tax profits.
The move will result in greater synergies coming from "the whole Alibaba economy" as Ant users avail themselves of Alibaba's shopping and entertainment platforms and vice versa, the Financial Times reported, citing Alibaba CFO Maggie Wu.
About 20% of new users on the e-commerce platforms Taobao and Tmall came from Ant, Wu said.
Alipay, Alibaba's payment platform, was carved out of the parent company into an entity in 2011. It was rebranded as Ant Financial Services in 2014.
Ant Financial also owns Yu'e Bao, the world's largest money market fund, and operates Sesame Credit, a third-party credit rating system.
The restructuring exercise involving Ant Financial is likely to eventually pave the way for its initial public offering.
Alibaba shares were down 1.54% at $174.07 at the time of publication.
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Photo courtesy of Alibaba.
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