Alibaba Group Holding Limited (NYSE:BABA), one of China’s pioneers of digital commerce and commerce technologies, has become a dominant player worldwide both in terms of sales volume and user numbers – currently boasting more than 500 million worldwide active accounts.
Initially focused on online sales and delivery services, Alibaba broadened their scope in 2003 with the launch of Taobao.com; an immensely popular shopping portal in China. Within one year Alibaba also created Alibaba.com dedicated solely 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. Alibaba has taken advantage of this influx to attract an ever-increasing pool of sellers and buyers, leading to continued sales growth. Recent financial results reflect this robust performance with a net profit of 27.71 billion yuan ($3.8 billion). This result represents significant improvement from year-ago levels. 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.