Known as the Chinese Amazon (NASDAQ: AMZN), Alibaba (NYSE: BABA) is gearing up for its biggest sales day of the year. Last year, the holiday posted a record $30 billion in transaction sales, and plans to exceed that amount on Monday. Singles' Day, which has been commercially celebrated by the company since 2009, has become a large conglomerate of sales and entertainment. Various companies join the 24-hour extravaganza, ranging in retail from cars to cosmetics. Jiang Fan, president of Alibaba's Taobao and Tmall, sees Singles' Day as the "Super Bowl for brands. It's an opportunity to pull out all the stops to wow Chinese consumers."
One way that Alibaba has been leading the Chinese online sales market has been through celebrity endorsements and live streaming. Becoming a normal sight on Chinese e-commerce platforms, online personalities and celebrities have hosted live streams actively viewed by consumers about the products they are marketing. Within the livestream, there is an option to buy the good, sometimes at an exclusively lower rate. Senior analyst at Forrester, Xiaofeng Wang, explains that live streams "might be a few minutes or 30 minutes long, within the time they provide exclusive offers. That is another motivation for consumers." Alibaba kicks off every Singles' Day with a live stream celebration before the day that reviews the sales that are to come and encourages consumers to pre-order.
Alibaba is also opening this year up to expansion. Recently, the e-commerce giant has been pushing its business overseas. Alibaba's own AliExpress this coming Singles' Day will let local merchants from Russia, Spain, Italy, and Turkey participate in the sale.
Due to the grand scale of the sales day, many investors may think this is a great time to buy into Alibaba. Alibaba shares were up over the past week, but history says that that gains around Singles' Day does not necessarily mean overall growth of the stock. Over the past five years for the week that ends on Singles' Day, shares of Alibaba are shown to sell off, dropping an average of 1.3% and trading negatively 80% of the time, according to the hedge fund trading tool Kensho. Alibaba during this time always underperforms.
Alibaba this year has been trading on the higher side leading up to the big day, but shares have not touched its all time or even 52-week highs. Despite all the excitement surrounding this 24-hour event, Alibaba shares most likely will maintain their initial price from the weeks prior, meaning no real growth or loss.