Bottom line:Alibaba’s stock is likely to face downward pressure through the end of the year, but could see a modest rally of up to 20 percent in 2016 as speculators pile out and founder Jack Ma enters a period of relative silence.
Jack Ma heading for hibernation after bearish year?
Many are taking advantage of the one-year anniversary of Alibaba’s (NYSE: BABA) record-breaking IPO to reflect on the past 12 months and what the future might hold for the company, especially for its stock that has gone on a roller coaster ride in that period. Many are quite subdued and even bearish on the stock, citing bad investments and a slowing Chinese economy. But I would actually take a contrarian view and say the shares could be poised for a modest rebound next year after China’s stock markets settle from their current turbulence.
My theory is rather simple. Alibaba’s stock became the plaything of speculators in the first year of trading after its $25 billion New York IPO last September became the biggest offering of all time. First it was the bulls who piled in, buying into the hype that Alibaba happily dished out about the explosive growth potential of China’s e-commerce market. More lately the bears have moved in, seizing on slowing growth, questionable investments and a piracy scandal to make some short-selling profits on the overvalued stock. Read Full Post…
Bottom line: Alibaba’s latest sell-off is part of an ongoing correction in the company’s value, reflecting a new era of more realistic expectations from investors.
Bloom continues to shrivel from Alibaba’s rose
After years of basking in the hype of adoring investors who briefly valued it even higher than much-older and far more global rival Amazon (Nasdaq: AMZN), Chinese e-commcerce leader Alibaba (NYSE: BABA) has entered a new phase centered on more realistic expectations for the company. That new phase has seen Alibaba’s stock tumble to a more realistic level this year on a steady series of bad news, including the latest reports that one of its key sales metrics wasn’t as strong as previously estimated last quarter.
But that wasn’t the only bad news for Alibaba in the last few days. Earlier reports this week said the company was cutting back in its college recruitment, in what looked like another sign of slowing growth. (previous post) An Alibaba official seemed to refute those initial reports, only to have a second series of reports emerge that seemed to confirm that the recruitment slowdown was indeed happening. (English article) Read Full Post…
Update: Since originally writing this post, Alibaba has put out a statement denying it is reducing graduate hiring, and says it has sent more than 1,400 job offer letters to graduating students for 2016 (Chinese article)
Bottom line: Alibaba’s reduction in its university recruiting program is an extension of a hiring freeze announced earlier this year, and is part of a much-needed effort to make its large headcount more efficient.
Alibaba trims campus recruitment
In what some may interpret as a sign of trouble, media are reporting that e-commerce leader Alibaba (NYSE: BABA) is sharply scaling back its recruitment of new college graduates. The interpretation of trouble is relatively obvious, since Alibaba has wooed investors with its breakneck growth story since its record IPO last year. Thus a sharp slowdown in hiring of young talent could signify a parallel slowdown in overall growth.
But the news shouldn’t come as a huge surprise, since Alibaba announced just 4 months ago that it would freeze its global headcount for the rest of the year. (previous post) That move was aimed at giving the company time to rationalize its huge workforce of 30,000, many of whom have joined as a result of Alibaba’s lightning growth that has included numerous acquisitions over the last 2 years. Read Full Post…
Bottom line: Alibaba’s new tie-up with Suning looks logical on the surface but is likely to run into problems due to overlap in the 2 partners’ businesses, which could lead to conflicts and an ultimate dissolution of the partnership.
Alibaba, Suning in massive new tie-up
I’m officially labeling today as “O2O Day” in China, as a recent wave of online-to-offline (O2O) tie-ups reaches a crescendo with news of a $4.6 billion investment by e-commerce giant Alibaba (HKEx: BABA) in traditional electronics retailer Suning (Shenzhen: 002024). Media aren’t really commenting on the size of the deal that will give Alibaba a 20 percent stake of Suning, but to my knowledge it’s the largest such deal in China Internet history and also quite possibly the largest ever by a Chinese tech company.
All that said, I’ll be quite blunt and add my view that I don’t completely understand the logic behind this particular deal and thus wouldn’t expect it to yield very strong returns. On the surface it looks like a classic O2O deal, combining Alibaba’s strength in online retailing with Suning’s in traditional retailing. But a closer look show this deal could be set for a bumpy ride for a number of factors, which I’ll discuss shortly. Read Full Post…
Bottom line: Alibaba’s naming of a westerner and former top Goldman Sachs executive as its new president looks like a smart move to boost its struggling global expansion, and could bring more focus to the division over the next year.
New Alibaba president to lead international efforts
After muddling around on the global stage for a while without much to show for its efforts, I’m happy to see that e-commerce giant Alibaba (NYSE: BABA) has finally taken the step of hiring someone with extensive experience outside China to spearhead its international expansion. The company’s naming of a former Goldman Sachs executive as its new president should help to bring some focus to an international drive that to date has been quite fragmented and hasn’t produced any solid results.
More broadly speaking, the naming of Michael Evans as the new president of Alibaba Group marks the second major appointment for the company in the last 3 months, as founder Jack Ma installs a new executive team to head his $200 billion company. His decision to name foreigners to some of the top spots mirrors a similar strategy by PC giant Lenovo (HKEx: 992) and also Tencent (HKEx: 700), one of Alibaba’s chief rivals. Read Full Post…
Bottom line: Alibaba’s new fund-raising activities are relatively small but provide insight about its future direction, hinting at a major pushes into the gadget and financial services spaces.
Alibaba, Foxconn invest in Pepper
A couple of new fund-raising headlines involving e-commerce giant Alibaba (NYSE: BABA) show company founder Jack Ma engaged at one of the things he does best, namely making deals and forging new partnerships. Neither deal is particularly big in terms of dollar investment, but both provide some insight on the kinds of partners and tie-ups that Ma is pursuing for both the New York-listed Alibaba and its separate but affiliated Ant Financial unit. Read Full Post…
Bottom line: The accelerating pace of deals by Alibaba and its founder Jack Ma could be cause for concern, potentially overwhelming the company and Ma and creating headaches as they work to integrate so many new tie-ups.
Alibaba in new deal frenzy
It’s no secret that e-commerce giant Alibaba (NYSE: BABA) has been on a buying binge over the last 2 years, snapping up billions of dollars worth of smaller companies and forging new alliances as it tries to get into just about any Internet and media business it can find. But even a veteran industry watcher like myself is getting dizzy this week by the accelerating series of deals, which has seen the company and its charismatic founder Jack Ma in at least 4 headlines involving major new tie-ups in a wide variety of spaces.
One of those is coming in the logistics space, with Alibaba announcing its purchase of a stake in a major Chinese parcel delivery service. Another comes in entertainment, where the company is reportedly in talks for a smart TV joint venture with PC giant Lenovo (HKEx: 992). Yet another deal is in finance, with Jack Ma reportedly buying a stake in the Hong Kong-listed Reorient Group (HKEx: 376). And all of those deals are coming a day after media reported that Ma has become a new investor in the sports entertainment unit of online video services high-flyer LeTV (Shenzhen: 300104). Read Full Post…
Bottom line: Alibaba’s change of CEO shows that founder Jack Ma is still calling the shots at the company, and a rally for its shares will be short-lived before they continue a gradual downward movement back toward their IPO level.
Alibaba shifts course with new CEO
Investors nervously awaiting the release of e-commerce giant Alibaba’s (NYSE: BABA) latest quarterly results were instead greeted with the surprising news that the company has just named its third CEO in 2 years. Alibaba founder Jack Ma is spinning the story as part of a plan to hand over the running of his company to a generation of Internet-savvy youngsters born after 1970. That may be true, though I do find it somewhat ironic that the replacement of former CEO Jonathan Lu with the younger Daniel Zhang shows quite clearly who is still firmly in control at Alibaba, namely Ma himself, who is hardly a post-1970s youngster. Read Full Post…
Bottom line: China’s “Big 3” Internet tycoons are likely to see their fortunes continue to grow at rates far faster than the broader economy over the next year, and they could even overtake some wealthier real estate magnates.
Jack Ma named China’s richest Internet tycoon
Hong Kong’s Li Ka-shing may still lead the list of wealthiest men in China and Hong Kong, but his traditional formula for success is rapidly losing ground to China’s fast-rising Internet magnates. The heads of China’s “Big 3” Internet firms were all among the top 10 people on this year’s just-published Forbes list of the wealthiest men in China and Hong Kong, spotlighting the huge role that the Internet is playing in China’s economy. Whereas Li’s fortune took decades to build, the founders of Alibaba (NYSE: BABA), Tencent (HKEx: 700) and Baidu (Nasdaq: BIDU) made their fortunes much more quickly, mostly over the last decade. Read Full Post…
Bottom line: Ant Financial is likely to get a low valuation from its new private placement due to the exclusion of foreign investors, but could see the figure reach up to $70 billion by the time of its 2017 IPO if it can rapidly build up its new services.
SOEs squeeze Ant Financial’s valuation
Yet another report has come out about an ongoing private placement by Ant Financial, saying the financial services affiliate of e-commerce giant Alibaba (NYSE: BABA) is now planning a domestic IPO in 2017. That’s a little later than was indicated in previous reports, which were probably a little too optimistic about a company whose various businesses are mostly less than 2 years old.
But the more interesting element in this recent flurry of reports has been what valuation the new private placement will bring for Ant, which is financially separate from the New York-listed Alibaba. Some of the earlier reports indicated Ant could be valued at up to $50 billion, which admittedly looks quite optimistic for a firm at its stage of development. But now the latest reports are bringing the number down sharply, saying the new funding will value Ant at between $35 billion and $40 billion. Read Full Post…
Bottom line: Alibaba’s Ant Financial unit is likely to get a strong valuation with a planned new private placement, and will embark on a series of high-profile moves before making a multibilllion-dollar IPO next year.
Ant Financial eyes 2016 IPO
Alibaba’s (NYSE: BABA) high-profile spat with Beijing is finally starting to subside, paving the way for the company’s affiliated financial unit, Ant Financial, to move into the headlines with word of plans for a major new fund-raising. But anyone holding Alibaba stock shouldn’t get too excited about Ant, which is separate from the listed company and whose rapid rise will only benefit Alibaba founder Jack Ma.
At the same time, other media reports are saying that Internet giant Tencent (HKEx: 700) has formally cleansed its popular WeChat mobile messaging platform of a holiday red-envelope feature from Alipay, Ant Financial’s most valuable asset. That development isn’t a surprise, but it does spotlight one of several major challenges that Ant will face as it tries to carve out a profitable place for itself in China’s fast-evolving financial services sector. Read Full Post…
