Alibaba’s (BABA) stock price trend fails to show the positive direction of the overall Alibaba Group’s performance. Despite the company’s extensive growth, traders seem unwilling to invest in Alibaba stock. Let’s find out what are investors major concerns about Chinese equities.
Alibaba stock outlook
The leading online commerce provider in China, Alibaba group offers a wide spectrum of B2C and B2B e-commerce services and mobile payments worldwide. The company is also engaged in cloud infrastructure business and holds the Chinese biggest online video site Youku Tudou.
Started as a standalone B2B e-commerce service Alibaba.com in 1999, the group has become the leading Asian e-commerce provider with numerous market leading brands, including online marketplace Taobao and retail platform Tmall.
According to the official June quarter 2019 results, Alibaba continues to experience rapid growth, expanding its user base to 674 million active consumers.
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Enjoying a stable and strong cash flow from its core commerce business, Alibaba continues to invest in technology and promote digital transformation to millions of international businesses. The latest data shows that the company’s revenue has grown 42% year-over-year.
Alibaba SWOT analysis
Alibaba is a widely-recognised e-commerce and cloud player in China. Right now it is struggling to expand its business into international markets at a faster pace. 2019 has been a financially strong year for Alibaba so far. However, there are several challenges ahead, such as finding new revenue channels and building stronger recognition on a worldwide level.
S – Strengths:
Strong recognition in China
Alibaba dominates the Chinese e-commerce and cloud business. During the recent years Taobao and Tmall – the company’s flagship brands – have experience robust popularity growth.
Strong e-commerce player
E-commerce accounts for 82% of the company’s revenue. Having gained popularity on the Chinese market, Alibaba is investing in other ecommerce businesses in other Asian countries, Europe and Middle East.
Alibaba has strenghtened its financial position year over year. The company’s core revenue grew by 54% in 2019, net revenue climbed up by 51%.
Cloud business development
Alibaba cloud service has experienced an impressive growth in recent years. From 2018 to 2019 it grew up 76%. With a growing R&D investments, Alibaba will ensure successful future for its cloud business.
Limited international presence
Overseas expansion is essential for the company’s further development. For now, China is still the main market for Alibaba group. Less than 10% of its revenue derives from the international markets.
Dependency on its core market
E-commerce business brings the largest part of Alibaba group’s revenue. Depending mainly on its e-commerce services and its domestic market, Alibaba is trying to find other revenue sources.
O – Opportunities:
Global expansion provides enormous opportunities for the company’s potential growth and development. Investing in Asian and European markets, Alibaba will reduce its dependence on the Chinese market.
Investing in innovation and research allows Alibaba to strengthen its position in light of Intense competition from the world’s leading e-commerce players, such as Amazon.
Acquisitions and international partnerships
Partnerships with other international brands, or acquiring smaller businesses in China and oversees allow Alibaba to grow faster. New lines will help the company to diversify their offering and provide access to new sources of revenue.
T – Threats
International e-commerce industry experiences a very intense competition. The global market dominance goes to Amazon and eBay. Besides, there are numerous regional players, which contribute to the growing competitive pressure.
US-China trade war poses a significant threat to major Chinese businesses, including Alibaba. Apart from harsh trade barriers, pressure on profits and revenues, it impedes the international expansion, which can eventually result in slower growth numbers.
Alibaba stock price analysis
The term “China discount” means that Chinese stocks will trade at a lower price due to the ongoing political concerns, related to China. Alibaba stock review shows that BABA shares stopped growing forward after the emergence of the US-China trade war. As a result, Alibaba stocks are traded at a two-year-old price level.
Will Alibaba stock go up and break this vicious circle? Let’s see. Despite internal stability and stellar performance result, the China discount has affected Alibaba group. Despite the company’s profit and revenue growth rates, exceeding 30%, BABA shares trade below the S&P 500 averages. Still, with massive growth numbers for the recent quarters, investors at least should add BABA stocks into their watchlist.
Alibaba stock price prediction
Historically, the Alibaba stock price record high was 182.51, on 20 September 2019. The latest closing price for Alibaba shares is 169.92 as of 23 October 2019.
According to the most recent Alibaba share price prediction by Walletinvestor, offering a 12-month price forecast, Alibaba stock can be a bad long-term investment.
Another popular analytical resource, CNNbusiness, shares quite the opposite Alibaba share price prediction. According to 52 analysts and their Allibaba stock projection for the next 12 months, BABA stocks will see a 828.33% increase from their current price.
This positive view is also supported by the GovCapital forecast, indicating that Alibaba stock will continue its rising trend. According to their prediction system, the Alibaba stock price is expected grow by 43.636%, which makes it a good investment.
Alibaba stock – buy or not
With contracts for difference, it does not matter whether your view of the Alibaba share price forecast is positive or negative. You can always try to profit from the future price fluctuations, regardless of their direction.
Follow the latest Alibaba news and track the BABA live rates with Capital.com. Conduct your own technical and fundamental analysis to decide whether to buy or sell Alibaba shares and include them into your investment portfolio.
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