|Bid||173.70 x 800|
|Ask||173.69 x 2200|
|Day's Range||171.45 - 174.28|
|52 Week Range||129.77 - 198.35|
|Beta (3Y Monthly)||1.84|
|PE Ratio (TTM)||49.76|
|Earnings Date||Aug 21, 2019 - Aug 26, 2019|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||217.88|
(Bloomberg) -- They propelled a little-known semiconductor manufacturer to a 521% surge, traded a mid-sized railway company 13 times more feverishly than the world’s largest bank and valued a chipmaking-gear producer at an eye-watering 730 times earnings.Chinese investors greeted the opening of the country’s Nasdaq-style equity market with a frenzied burst of trading on Monday, driving gains in all 25 companies that made their debut. The stocks jumped an average 140% at the close in Shanghai, even as most slipped from their intraday highs. About 48.5 billion yuan ($7.1 billion) of shares changed hands on the so-called Star board, or about 13% of turnover in the rest of the market.The new venue is China’s latest attempt to avoid losing the next Alibaba Group Holding Ltd. or Tencent Holdings Ltd. to exchanges in New York or Hong Kong. Endorsement from top officials helped generate such enthusiasm that firms raised a combined $5.4 billion, about 20% more than planned. Demand from retail investors has outstripped supply by an average 1,800 times, even as some analysts voiced concern over lofty valuations.“Gains were much stronger than expected, either due to unreasonable IPO pricing or speculative trading,” said Zhu Junchun, a Shanghai-based analyst with Lianxun Securities Co. “It’s going to be a liquidity game in the first half year or one year of trading. Judging by the trading activity and gains on the board, it’s definitely a success.”The board is also a testing ground for regulators, who have waived rules on valuations and debut-day price limits for the first time since 2014. The venue is the only one in China to welcome companies that have yet to make a profit, as well as shares with unequal voting rights. The Shanghai stock exchange will create an index tracking the firms about two weeks after the 30th listing starts trading.Shares on the Star board have no daily price limits for the first five trading days, followed by a 20% cap in either direction. To limit volatility, the venue suspends activity for 10 minutes if a stock moves by 30% and then 60% from the opening price in the first five trading days, a wider band than the rest of the stock market. Only certain qualified foreign investors can buy the stocks directly, as there’s no access through trading links with Hong Kong.The first batch of listings included China Railway Signal & Communication Corporation Ltd., whose Hong Kong shares sank on huge volume as traders switched into the A shares. Advanced Micro-Fabrication Equipment Inc., which was the most expensive listing of the batch, jumped as much as 331%. Its 171 multiple compared with an average of 53 times for the group, and 33 for similar stocks on other Chinese venues.Despite the hype, there are questions about whether the excitement will give way to the lukewarm sentiment that’s blanketing the world’s second-largest equity market. On the other hand, a sustained period of ultra-high demand risks draining funds from other exchanges, where volumes are shrinking. The Shanghai Composite Index fell 1.3% on Monday, while the ChiNext Index was down 1.7%.It’s not the first time China has sought to create an alternative venue for smaller companies. The ChiNext board was launched in Shenzhen almost a decade ago with fewer listing requirements than the main venues. The tech-heavy exchange was at the center of a spectacular boom and bust in 2015 that burned hordes of novice traders. Officials will be keen to avoid such extreme volatility -- the ChiNext remains more than 60% below its peak four years ago.“I’m not going to participate in the Star board anytime soon,” said Qu Shaohua, managing director at Acroguardian Investment Co. “With prices at these levels it will take quite a long time for the market to fully digest the current valuation and adjust to a reasonable price.”The Star board’s launch dovetails with Beijing’s pledge to boost direct financing for companies struggling to raise funds, and has taken on added significance as heightened trade tensions with the U.S. threaten China’s technology supply chain.“I would say that the launch is a success,” said Fu Lichun, an analyst at Northeast Securities. “People are indeed quite enthusiastic, and maybe got a little over-excited at the open.”\--With assistance from Irene Huang, Lujia Yu, Fox Hu, Ken Wang, Ludi Wang and Michael Patterson.To contact Bloomberg News staff for this story: Evelyn Yu in Shanghai at email@example.com;April Ma in Beijing at firstname.lastname@example.org;Amanda Wang in Shanghai at email@example.comTo contact the editors responsible for this story: Sofia Horta e Costa at firstname.lastname@example.org;Sam Mamudi at email@example.comFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- aCommerce, a Bangkok-based startup that helps brands such as Samsung, L’Oreal and Unilever sell their products online across Southeast Asia, has raised more than $10 million from existing investors including KKR & Co.KKR’s Emerald Media, investment house Blue Sky, DKSH Holding AG and an arm of Indonesian conglomerate Sinar Mas also took part in the company’s latest funding round, intended to drive the startup’s expansion and help it reach profitability by early 2020. That in turn paves the way for an initial public offering in two to three years, Chief Executive Officer Paul Srivorakul said. The six-year-old firm plans to raise another $5 million by the end of this year as part of an extended Series B or early-stage funding round, he added.“We have the ambitions for an IPO so it’s really important that we grow a healthy, valuable business,” Srivorakul said in an interview.aCommerce is trying to set itself apart from other online retail startups that focus on growth over the bottom line. Rather than go head-to-head against Chinese giants from Alibaba Group Holding Ltd. to Tencent Holdings Ltd. and JD.com Inc., which have made inroads into the region in recent years, the Thai outfit concentrates on supporting brands keen on expanding their own online sales.aCommerce makes money by providing services from distribution and marketing to warehousing and delivery. It operates in Singapore, Indonesia, Thailand, Malaysia and the Philippines. In 2018, revenue grew 73% to more than $100 million, and its core market of Thailand turned profitable, according to the CEO.It’s early days but the company may choose to list in Bangkok, Singapore or Australia to stay close to the Southeast Asian market, he said.To contact the reporter on this story: Yoolim Lee in Singapore at firstname.lastname@example.orgTo contact the editors responsible for this story: Edwin Chan at email@example.com, Lulu Yilun ChenFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- If you hold shares in New York-listed Alibaba Group Holding Ltd., you don’t own a stake in a Chinese internet powerhouse.What you have are the American depositary receipts of a Cayman Islands company that has a contract with the Chinese firm. In fact, the country’s largest search and e-commerce provider(1)is ultimately controlled by Alibaba Partnership, a collection of 38 people, most of whom hold senior positions in the company.This business structure, called a variable-interest entity, became common among Chinese companies because Beijing restricts foreign investment in certain sectors, such as the internet. It also enables firms to raise money abroad and lets early investors get their funds out of the country. Tencent Holdings Ltd., Meituan Dianping and Baidu Inc. all hew to various versions of the VIE, allowing them to exploit a gap in Chinese law.In total, almost $1.3 trillion in market capitalization is linked to Chinese VIEs listed outside the mainland, according to U.S. credit-ratings provider Standard & Poor’s Financial Services LLC.For now, these companies aren’t doing anything illegal and Beijing hasn’t seen the need to close this loophole. Keeping VIEs operating in a gray area gives policymakers the flexibility to crack down at will. But as the trade war intensifies, China has a growing incentive to keep its tech giants, and their cash, at home. In that light, it’s not inconceivable that officials would take steps to eliminate the structure, even if it spooks foreign investors.For years, knowledge that the Chinese government could take action at any time hung a legal cloud over VIEs. S&P previously accounted for such risk among VIEs operating in sensitive businesses, such as Alibaba and Tencent, though not for others in more mundane areas like retail.In a report last week, analysts Clifford Kurz and Sophie Lin wrote that recent changes in China’s foreign-investment law make no mention of VIEs, after an earlier draft sought to prohibit them. S&P interprets this to mean that concerns have diminished. I understand their reasoning, but disagree with the conclusion.Silence is certainly better than an explicit ban. Yet having a gray area within an opaque legal system simply puts such companies and investors at the whim of policymakers. There may indeed be a lack of incentive to dismantle VIEs today, and doing so probably would hurt foreign-investor sentiment. Neither factor amounts to much if Beijing one day gets fed up with Chinese companies using overseas listings as a way to get their assets offshore.This year alone, 31 Chinese companies chose to raise almost $6 billion by listing in the U.S. Not because they get better valuations there, but because founders and VCs know a public offering in China would give them illiquid assets subject to capital controls. Beijing has tried all sorts of things to encourage its companies to list at home, the latest being the SSE STAR Market – a Nasdaq-style tech board – for which regulators eased rules to attract interest. Yet as my colleague Nisha Gopalan wrote recently, Chinese companies still want to raise dollars, both to fund expansion and give Western venture-capital firms a hard-currency exit.If such carrots keep failing, Beijing could very well bring out sticks. Given the state of U.S.-China relations, there’s little reason to believe policymakers will prioritize the concerns of foreign investors over its own desire to prevent capital flight.This means that in assessing VIEs, foreign investors need to consider whether they’re willing to leave $1.3 trillion to the whims of a Chinese legal gray area.(1) Alibaba's revenue primarily comes from sellers paying to get elevated in search results on its platforms.To contact the author of this story: Tim Culpan at firstname.lastname@example.orgTo contact the editor responsible for this story: Rachel Rosenthal at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
From Xiamen to Shanghai mass graveyards of dirty bikes, all twisted frames and busted axles and handlebars, have become an unwanted emblem for hundreds of Chinese start-ups that once thrived on the back of easy money, hard graft and a light regulatory touch. When the idea took hold in 2015, the bike rental companies’ promise to attract China’s booming middle class pulled in billions of dollars from investors even if they often charged cyclists very little or in some cases nothing to use their services.
On a sum-of-the-parts basis, the shares are arguably priced as much as 50% below the Japanese company’s underlying asset value.
In 2016, Xiaomi appeared to be on the verge of collapse. The company has since risen like a "Chinese phoenix," but it still faces challenges in the tough smartphone market.
Alibaba (BABA) has been upgraded to a Zacks Rank 2 (Buy), reflecting growing optimism about the company's earnings prospects. This might drive the stock higher in the near term.
(Bloomberg) -- Sign up for Next China, a weekly email on where the nation stands now and where it's going next.Less than a year after President Xi Jinping first touted the project, China’s new stock venue designed for technology startups will start trading on Monday.Twenty-five companies will be part of the launch in Shanghai, out of the more than 100 hopefuls that applied to go public on the platform. Endorsement from top officials helped generate such enthusiasm that the firms raised a combined $5.4 billion, about 20% more than planned. Demand from retail investors has outstripped supply by an average 1,800 times, even as some analysts voiced concern over lofty valuations. One company priced its shares at 171 times earnings.“The first-batch listings are expected to be boosted by investor demand,” said Mark Huang, an analyst at Bright Smart Securities. “There’s a good chance we’ll see a rush into these stocks due to the limited supply.”Modeled after the Nasdaq Stock Market in the U.S., the so-called STAR board is China’s latest attempt to avoid losing the next Alibaba Group Holding Ltd. or Tencent Holdings Ltd. to exchanges in New York or Hong Kong. It’s also a testing ground for regulators, who have waived rules on valuations and first-day price limits for the first time since 2014. The venue will be the first in China to welcome companies that have yet to make a profit, as well as shares with unequal voting rights.The listing companies include China Railway Signal & Communication Corporation Ltd. -- already listed in Hong Kong -- and gastrointestinal equipment maker Micro-Tech (Nanjing) Co. Ltd. Advanced Micro-Fabrication Equipment Inc., which sells products used to make semiconductors, is the most expensive stock of the batch. Its 171 multiple compares with an average of 53 times for the group, and 33 for similar stocks on other Chinese venues.A handful of stocks linked to the first batch advanced on Friday, showing investor enthusiasm ahead of the new board’s debut. And another two firms joined the queue to list: Amlogic (Shanghai) Co. and Shanghai Friendess Electronic Technology are aiming to raise a combined 2 billion yuan ($291 million), according to their prospectuses.Despite the hype, there are questions about whether the excitement will give way to the lukewarm sentiment that’s blanketing the world’s second-largest equity market. On the other hand, a sustained period of ultra-high demand risks draining funds other exchanges, where volumes are shrinking. Mainland markets sank earlier this month after China announced the STAR board’s official start date. The Shanghai Composite Index rose 0.8% on Friday.It’s not the first time China has sought to create an alternative venue for smaller companies. The ChiNext board was launched in Shenzhen almost a decade ago with fewer listing requirements than the main venues. The tech-heavy exchange was at the center of a spectacular boom and bust in 2015 that burned hordes of novice traders. Officials will be keen to avoid such extreme volatility -- the ChiNext remains more than 60% below its peak four years ago.Shares on the STAR board will have no daily price limits for the first five trading days, followed by a 20% cap in either direction. To limit volatility, the venue will feature a mechanism that suspends activity for 10 minutes if a stock moves by 30% and then 60% from the opening price in the first five trading days, a wider band than the rest of the stock market.The STAR board’s launch dovetails with Beijing’s pledge to boost direct financing for companies struggling to raise funds, and has taken on added significance as heightened trade tensions with the U.S. threaten China’s technology supply chain.“It’s one of China’s key strategies to support technological innovation,” said Zhang Yankun, fund manager at Beijing Hone Investment Management Co. “If investors can get decent returns from these listings, it would attract more money to the sector and help China’s capital market compete with developed markets.”(Updates with stock moves in sixth and seventh paragraphs.)\--With assistance from Irene Huang and Lujia Yu.To contact Bloomberg News staff for this story: Ken Wang in Beijing at firstname.lastname@example.org;Evelyn Yu in Shanghai at email@example.com;Fox Hu in Hong Kong at firstname.lastname@example.org;Ludi Wang in Shanghai at email@example.comTo contact the editors responsible for this story: Sofia Horta e Costa at firstname.lastname@example.org;Sam Mamudi at email@example.comFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Forget medical school and engineering degrees. With a record 8.3 million university graduates this year, Beijing is urging its best and brightest to take up competitive video-gaming. ESports professionals can make triple the national average salary, according to the Ministry of Human Resources and Social Security. As the economy slows, pouring resources into China’s night-shift GDP might just be wacky enough to work. Municipal governments have taken the hint, luring gaming clubs with cash handouts and other perks. The resort island of Hainan is setting up a 1 billion yuan ($150 million) development fund and giving up to 10 million yuan in subsidies for international tournaments. Shanghai’s Yangpu district offers a 30% rental discount to businesses in the sector.The push has made unlikely pairings of 60-year-old local bureaucrats and thirtysomething eSports executives, who’ve been forced to ditch their PowerPoint presentations for formal government memos. Pan Jie, nicknamed “the Queen” among China’s professional gamers, has learned that Bohemian dresses and video-game T-shirts don’t go over well when officials visit the Hangzhou headquarters of her club, LGD-Gaming, one of China’s largest.With government support, Pan Jie’s dream of operating her own eSports stadium is getting closer to fruition. Still, you’d be forgiven for doubting that layers of statist procedure can springboard the competitive video-gaming sector, particularly when China’s private enterprises are already struggling to get the funding they need. Having scouted venues across China, Pan Jie settled on a plot of land on the outskirts of Hangzhou, within a shantytown development zone located in the Xia Cheng district. Beijing has been working to revive these areas since 2015, with the central bank flying in more than 3.5 trillion yuan of helicopter money to support such projects through pledged loans. The Xia Cheng district is hoping that a new eSports park – along with the tourism and tech jobs it can generate – will bring in over 1 billion yuan, more than 10% of the 8.9 billion yuan in fiscal revenue it collected in 2018. Judging from a publication by the district’s news office, officials seem to have outlined concrete policies rather than grand promises. Indeed, the local government was quick to act, tearing down old residential buildings to make space for the new construction, which will eventually house up to 1,000 startups. To help LGD-Gaming move into the new center by its May deadline, officials even called furniture shops late at night, demanding employees work overtime to meet the company’s needs. A handful of bureaucrats temporarily stationed at the park have been assigned as startup liaisons.Whether Xia Cheng can meet all the grand expectations is a big unknown. Hangzhou is home to China’s wealthiest businesses, including Alibaba Group Holding Ltd. Yet not all areas are created equal. Last year, Xia Cheng’s GDP grew 6.1% to 93 billion yuan, not even half that of the tourist district of Yu Hang. Meanwhile, Xia Cheng has entrenched business interests to deal with. Smack at the center of the eSports zone is a huge, five-story warehouse occupied by Zhejiang Food Stuff Corp., a provincial champion known for its cured ham. The district has to wait for the company to build another site before any demolition work can begin. For the time being, startups have occupied a small corner of the redevelopment zone, and Shenzhen-based Quantum Capital, a venture-capital firm, postponed opening a branch there. Over the next five years, China’s competitive video-gaming industry can absorb close to 2 million workers, according to the Ministry of Human Resources. But throwing cash at an idea isn’t enough. Bureaucrats will need to show that they can work effectively with what they once called the “lost souls” of the gig economy. During a recent visit to LGD-Gaming, one official pooh-poohed a hipster barbecue joint inside the eSports park: Grilling lamb chops on an open pit? How undignified, he apparently complained. The business was shut within days. “We were sad for a while, because their lamb tasted great,” Pan Jie lamented.To contact the author of this story: Shuli Ren at firstname.lastname@example.orgTo contact the editor responsible for this story: Rachel Rosenthal at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She previously wrote on markets for Barron's, following a career as an investment banker, and is a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
When it comes to the digital ad market, Alibaba (NYSE:BABA) is doing everything it can to drive Alibaba stock higher. Source: Shutterstock InvestorPlace - Stock Market News, Stock Advice & Trading TipsRemarkably, in the digital-ad sector, Alibaba is beating Amazon (NASDAQ:AMZN) at its own game. Over the long-term, that will greatly boost the BABA stock price. * 7 Stocks Top Investors Are Buying Now But first, here's the back story. Amazon's Ad GrowthOne of the big stories about Amazon in 2019 is how well the e-commerce giant is doing in the digital-ad market. Although the space has long been the exclusive domain of Google and Facebook (NASDAQ:FB), Amazon has managed to elbow its way into the mix in relatively short order. That's one of the many reasons why Amazon's stock is up 32% in 2019. As the e-commerce company's core retail business has slowed, Jeff Bezos and company have worked to find new sources of growth. The digital-ad market happens to be one of those growth areas. Estimates suggest Amazon's annual-digital-ad revenue over the next five years will jump to $40 billion, up from $10 billion in 2018.Alibaba also has a reasonably strong and growing ad business. In fact, its ad business is larger and growing more rapidly than Amazon's. I wouldn't buy Alibaba stock solely for this reason. However, it certainly should make investors think twice about choosing Amazon over BABA stock.. China vs. AmericaeMarketer estimates that Alibaba's digital-2019 ad revenues will come in at $29.2 billion, more than double that of Amazon. That puts BABA in third place in global digital-ad revenue, behind Facebook and Google, which are expected to generate digital-ad revenue of $67.4 billion and $103.7 billion, respectively. Alibaba's digital ad revenues are so substantial that the fifth, sixth, and seventh-largest sellers combined are expected to generate $30.4 billion of digital-ad revenue, just 4% more than Alibaba. Yet, all anybody can talk about is how great Amazon is doing in the advertising business. I think it's time to give Alibaba its due. That's especially true in light of the differences between the Chinese and U.S. digital ad markets. China's digital-ad spending is expected to grow from $65.4 billion in 2018 to $134.3 billion in 2023. In 2019, the country's digital-ad spending is expected to increase by 22% to $79.8 billion,. In the U.S., digital ad spending is projected to grow from $108.6 billion in 2018 to $201.8 billion in 2023. That's meaningfully slower growth than in China. The Bottom Line on Alibaba StockOn the one hand, the fact that Alibaba controls over a third of all Chinese digital advertising is an impressive statistic. On the other hand, Amazon is a major participant in the U.S. digital ad market, which is expected to grow almost as quickly as China's over the next five years. Additionally, AMZN only has 9% of the entire U.S. market at the moment. It's much easier to go from 9% to 18% than it is to go from 35% to 70%. From that perspective, some could surmise that Amazon's got an easier growth path when it comes to the digital-ad market.However, that viewpoint assumes that Alibaba won't make any headway in digital ads outside of China. I believe that's much too pessimistic, given the company's international expansion possibilities. So, the owners of Alibaba stock should continue to pay attention to BABA's advertising business because BABA just might have an even better opportunity in that area than Amazon does at this point. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks Top Investors Are Buying Now * The 10 Best Cryptocurrencies to Keep on Your Radar * 7 Marijuana Penny Stocks That Could Triple (But You Won't Make Money) The post Alibaba Stock Can be Boosted by Digital-Ad Growth appeared first on InvestorPlace.
Online retail is booming, a sector with $680 billion in annual sales and growing at nearly 10% per year. This is the fertile ground that has made Amazon.com (AMZN) so profitable, drawing in investors and pushing the share price close to $2,000.Amazon’s dominance in the niche is not unchallenged. From China, comes Alibaba (BABA), the competitor with a domestic customer base over one billion strong. China’s fast-growing e-commerce sector has made Alibaba a winner, in a market with 20% of the world’s population and at $12 trillion, 15% of the world’s economy. This is a solid foundation.Both companies got their start in the 1990s, have established successful branding on their home turf and beyond, and now are rubbing shoulders uncomfortably in the global markets. But which one is better for investors? Amazon.com, Inc. (AMZN)The reigning champion of online retail is Amazon. The giant’s $990 billion market cap makes it the world’s second largest publicly traded company, and its annual revenues of $232.9 billion make up 34% of the global total of online retail.On July 15 and 16, Amazon held its annual Prime Day event, a two-day, members-only sale that generated record purchases. While the company does not release sales revenue figures until the quarterly reports, a company press release did state that Amazon Prime customers purchased more than 175 million items during the 48-hour period, making Prime Day’s sales numbers bigger than last Black Friday and Cyber Monday put together.Amazon’s Prime Day success follows Loop Capital’s Anthony Chukumba’s July 15 prediction. The analyst said that he expected a “highly successful” event, adding that, “The event is an opportunity to highlight Amazon's launch of one-day delivery for Prime members as it serves the purpose of generating significant volume during the seasonally slow time of the year and driving incremental Prime subscriptions.” Chukumba’s buy rating and $2,380 price target suggest a 19% upside to AMZN shares.John Blackledge, of Cowen, agrees with Chukumba about Amazon’s potential for investors. He looks farther ahead than Prime Day, however, saying that he expects the company’s Q2 earnings report on July 25 to exceed the $5.10 EPS forecast. He says, “We expect revenue and unit growth to accelerate from 1Q19 levels. We forecast 2Q19 reported revenue of $63.4BN… Our revenue forecast is 1.5% above consensus and near the high end of guide range…” His sets a bullish price target of $2,500, implying an upside of 25%.Overall, Amazon holds a strong buy rating from the analyst consensus, based on 35 buys and 1 hold assigned in the last three months. The stocks average price target of $2,250 gives a 12.9% upside from the current share price of $1,992. Alibaba Holdings Ltd. (BABA)Alibaba is working hard to build a presence outside of China. The company’s Ali Express platform, for international orders, is growing in popularity. As a challenger in the global online retail space, however, Alibaba started from a smaller base. Despite China’s huge population, it is only in the last decade that the country’s economy truly begun takeoff. So, even though Alibaba currently has a solid domestic support, with access to more potential customers in the home market than Amazon has, BABA’s market cap of $450 billion is just under half that of Amazon’s, while the share price of $174 is only 9% of the American company’s. The disparity is visible in annual revenues, too. Alibaba brought in $56 billion in its last fiscal year, about one-fourth of Amazon’s $232 billion.None of this means that Alibaba is in a worse position than Amazon, only that it is a smaller company. Alibaba has followed a different path to success; where Amazon controls every aspect of its business, from the online platform to the supply line to the shipping warehouse to the deliver, Alibaba is a sales platform that arranges shipping. It keeps down overhead, which in turn helps level the field for the underdog.Underdog is another relative term, however. As in the business model, Alibaba is also pursuing a different stock-return model. Where Amazon keeps its total number of share outstanding low, at about 500 million, Alibaba has 4 billion ordinary shares. In addition, as part of its move to make an IPO in Hong Kong, Alibaba management proposed a 1 to 8 stock split that would reduce the price per share and increase the number of shares outstanding to a whopping 32 billion. It’s a move to encourage sales, and raise fresh capital. Estimates are, the company can raise as much as $20 billion by listing in Hong Kong. The stock split proposal was approved by shareholder vote, overwhelmingly, on July 15.Writing ahead of the shareholder vote, Citigroup’s Alicia Yap describes the split as “necessary” for a successful Hong Kong listing. She believes that company management approach the mechanics of the split with care, to “minimize the dilution impact to existing shareholders.” Of the organizational change as a whole, she says, “This latest reorganization upgrade once again demonstrates the focus of Alibaba’s management and its determination in improving strategic direction and growth opportunity…” Yap rates BABA as a buy, and puts a $229 price target on the stock, a 31% upside from current levels.Raymond James analyst Aaron Kessler agrees with the positive outlook on BABA. Focusing on long-term trends, he says: “Alibaba remains our top large cap pick, given we expect continued solid China ecommerce growth with Alibaba as the biggest winner… and that we believe valuation is attractive at ~10x 2020 marketplace EPS…” Kessler sets a $280 price target to go with his buy rating, indicating his confidence in an eye-catching 60% upside for BABA shares.Like Amazon, BABA shares hold a strong buy rating from the analyst consensus. Shares are currently selling for $174, so the $220 average price target suggests a 26% upside. Expect those numbers to change in the mid-term future, however, as the approved stock split must take place before July 15, 2020. At the current valuation, a 1 to 8 split will give each share a price of $21.75. Which Stock Measures Up?So which online retail giant is the better buy? Both companies show solid earnings and have a stable foundation for current and future business. Amazon has far and away the higher cost of entry, but the share price is high enough that, even with a lower upside potential, the gains in absolute numbers are likely to outweigh BABA’s. Alibaba, however, offers impressive upside potential combined with far lower share price – and that share price will decline sharply within a year, without reducing the upside.From an investor’s perspective, AMZN is the premium buy while BABA is the budget alternative. Think of the difference between driving a Mercedes and a Honda – the Mercedes will outperform, but the Honda may bring a better value per dollar.
Michael Kors, the namesake brand established by the world-renowned, award-winning designer of luxury accessories and ready-to-wear, today announced that it will open its digital flagship store on Tmall, which will be featured on Tmall Luxury Pavilion, Alibaba Group’s dedicated platform for luxury and premium brands. The new online store marks the first third-party partnership for Michael Kors in China and will provide Tmall customers in China with exclusive access to special products launched only on Tmall as well as the entire range of Michael Kors women’s and men’s products. “We are excited to launch our new Michael Kors digital flagship on Tmall and Tmall’s Luxury Pavilion.
The goal of this article is to teach you how to use price to earnings ratios (P/E ratios). To keep it practical, we'll...
Much of the direction that Alibaba (NYSE: BABA) stock takes depends on the trade talk progress between the U.S. and China. So when the two countries agreed on a temporary truce that would prevent further new tariffs, Alibaba stock bounced.Source: Shutterstock The stock bottomed at $150 at the start of June but just recently broke above some 50-day and 200-day technical resistance at around $165.Though the earnings report is still nearly a month away (set for Aug. 14 before the market opens), what are the near-term positive catalysts?InvestorPlace - Stock Market News, Stock Advice & Trading Tips Higher Liquidity in Alibaba StockThe Altaba (NASDAQ: AABA) shareholder approval of complete liquidation on June 27 will increase the stock liquidity. Take the Vivendi scenario as a case study to predict what happens next with BABA stock. * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip Vivendi, once a major shareholder in Activision (NASDAQ: ATVI), sold an $8.3 billion stake in 2013 and then the rest of its stake for $1.1 billion in 2016. This lifted a major overhang for Activision and helped lift the stock. It just happened that the demand for gaming grew steadily in those years, but the improved share liquidity cannot be ignored. When a major stockholder liquidates its Alibaba stock, expect trading to increase.Altaba shareholders might want to switch to BABA stock ahead of the liquidation. Altaba trades at a discount to the value of Alibaba stock because the market is already discounting the massive capital gains tax the holding company will face. Conversely, investing in Alibaba is attractive even at current levels. At a 20 times forward P/E, the other valuation multiples will fall when the company reports quarterly earnings that easily beat market consensus estimates.On July 15, Alibaba proposed splitting its shares one-to-eight. The lower price per share will attract investors who previously would prefer not to hold a $173.50 share. They would prefer holding eight shares at $21.69. Strong Growth ExpectedIn the fiscal fourth quarter, Alibaba reported earnings of $1.25 a share as revenue grew 39.6% to $13.6 billion. The company grew strongly after taking a number of initiatives. It attacked counterfeiting by forming the Alibaba Anti-Counterfeiting Alliance in 2017.The group now has 132 global brand companies stemming from 16 countries in 12 diverse industries. Despite criticisms of Intellectual Property (IP) theft and copying in China, China took steps to protect against IP infringement in recent years. Alibaba aligned its corporate values to that of China's by protecting IP.Alibaba targeted its business so its products resonate with China's middle class. China now has a middle-class population of 300 million. Domestic consumption is $5.5 trillion today. But looking ahead, demand from the lower-tier (third, fourth, and fifth-tier) cities will triple from $2.3 trillion to almost $7 trillion in the next decade.Operationally, Alibaba has scale and effectiveness that competitors cannot match. For example, its Tmall cross-border commerce platform widens its addressable market. Even while benefiting from domestic growth, it stands to grow its market giving overseas brands and merchants a way of selling to Chinese consumers virtually. Alibaba's Partnerships with Big BrandsAlibaba partnered with Starbucks (NASDAQ: SBUX) to establish a strong brand presence in China. It did this through Alibaba's mobile-ready China retail marketplace. This allows Starbucks to expand its physical presence while building achieving customer engagement and acquisition through its mobile app.In the last fiscal year, Tmall's use of proprietary insight technology and marketing tools helped merchants grow their customer base. Over 1,200 brands each acquired an incredible 1 million new customers on its platform. And in the fourth quarter, customer management revenue grew 31% from last year.A bigger user base combined with better conversion rates, plus trendy new brands led to higher fees collected. Instead of aiming to monetize recommendation fees further, Alibaba will re-invest the earnings to grab more of the market. It is determined to win customers from cities that are Tier 3 and below. Valuation and Your TakeawayAlibaba exhibited strong commission and customer management commerce revenue growth. If the pace of growth matches that achieved in Q3/2019, Alibaba stock will trade higher.Source: BusinessQuantAnalysts have a price target that is 27% above the recent $173.50 closing price (per tipranks). At ~$221, the analyst valuation may prove too optimistic. Conservative investors may assume a perpetuity growth rate of ~4.0% instead. Per finbox.io, that implies the stock's fair value using a 5-year DCF Growth Exit model is just below $210 a share.As of this writing, Chris Lau did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip * 7 Services Stocks to Buy for the Rest of 2019 * 6 Stocks to Buy and 1 to Sell Based on Insider Trading The post The Future Just Looks Better and Better for Alibaba Stock appeared first on InvestorPlace.
Though Alibaba Group Holding (NYSE:BABA) was founded and grounded on an industrial revolution that drew hordes of people from rural China to its major cities, most owners of Alibaba stock know the company's future growth lies outside of those urban areas. Outlying second-tier cities and even minor villages are finally catching up with their more metropolitan peers, particularly in terms of communication.Source: Shutterstock What's the great irony -- and potential problem -- in that paradigm shift? A shrinking rural population. The China National Bureau of Statistics reported earlier this year that the country's rural areas saw 13 million people leave for more opportunity in 2018. Many of those leaving were among the most promising income-earners that could find more rewarding employment elsewhere, taking their discretionary income with them when they left.Now, with China's economic growth falling to a 27-year low as of June, the already-imbalanced trickle-down upside of the nation's new economic engine is further jeopardized. A shrinking population, particularly among working aged people, only exacerbates the concern.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIt's a paradigm that calls into question just how much growth Alibaba can truly expect to find in China's more remote areas. It's a paradigm that also quietly weighs on the BABA stock price, even if most owners of Alibaba stock don't fully realize it the full scope of the brewing storm.There's a narrow pathway starting to appear through the distant fog, however. China's Big Cities Attract Rural WorkersIt's not a challenge its U.S. rival Amazon.com (NASDAQ:AMZN) ever had to contend with, though for the record, Alibaba rivals like JD.Com (NASDAQ:JD) and Baozun (NASDAQ:BZUN) are largely in the same boat.That is, China is a huge country, and for as much work that's been done to improve incomes outside of its biggest cities, its rural population continues to shrink after being eclipsed by metropolitan populations back in 2011. Those urbanites take their discretionary incomes with them, dragging down rural economic activity faster than redistribution efforts can boost them. The undertow takes some of the strategic shine off of Alibaba's plans. * 7 Dependable Dividend Stocks to Buy China's lopsided economic revolution, however, may be on the verge of another tidal shift that once again works in favor of Alibaba stock. Urbanites are now moving back to more rural areas, taking jobs and discretionary incomes with them. China's Digital Economy 2.0On balance, China's biggest cities are still gaining workers at rural areas' expense. The trend is abating though. Last year, seven million people shed their yuppie status to return to rural areas. Almost two-thirds of that group did so to work on China's farms.Things have changed dramatically, even if unevenly, on China's pastoral landscapes. Though still rustic in some spots by most anyone's standard, the government's support via subsidies, the establishment of wireless telecom and internet service and the improvement of basic utilities are all improving the case for foregoing city life.The so-called reverse migration also has an element that will feel familiar to U.S. investors and inhabitants as well, however. The new rural population is doing business in a way their parents wouldn't have, and largely still can't.Case in point? Farmer Xu Pengfei and his business partner, an online-video celebrity of sorts who goes by the name Handsome, are promoting their produce grown in northern China's Yujin village. The videos are filmed with an iPhone, selling fruits and vegetables to consumers nowhere near their farm. Government reports suggests that half of all the people leaving China's cities are engaged in some sort of e-commerce, which transcends the physical limitations of distance.It's making a difference too, as these migrants are finding their incomes ultimately improve when they become rural entrepreneurs. * 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond "[Returning migrants] have become a major driving force in closing the gap between Chinese cities and villages, and between the coast and inland," explains Cui Chuanyi, with Beijing's Development Research Centre of the State Council. Cui concludes "Much of China's future growth lies in these less-developed regions," jibing with a message Alibaba stock owners have been hearing for a while now.Those wealthier entrepreneurs also make for stronger consumers, but most noteworthy is the fact that Handsome's and Pengfei's preferred platform for selling produce online is Taobao, owned by Alibaba. Looking Ahead for Alibaba StockIt's not a reason in and of itself to step into BABA stock. It's a secular shift that could take years to play out. Much could change in the meantime, and not all would-be entrepreneurs have found moving out of the city is a recipe for fortune. Indeed, urban populations are still growing, and rural populations continue to shrink.On the other hand, even with a number of potential pitfalls still looming ahead for the e-commerce giant's rural focus -- like market saturation and logistical hurdles -- there's certainly argument to steer clear of Alibaba stock. As Barron's confirmed on Sunday about the company's rural ambitions, "Alibaba is growing fast there."As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter, at @jbrumley. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Retail Stocks Goldman Sachs Says Are Ready to Rip * 7 Services Stocks to Buy for the Rest of 2019 * 6 Stocks to Buy and 1 to Sell Based on Insider Trading The post Once an Urbanization Play, Alibaba Stock is Now a Good Bet on Rural China appeared first on InvestorPlace.
Investors have been keeping their eyes locked on the relationship between the US and China as the rhetoric spewing from the conflict has impacted the stock market for the over a year now.