Alibaba
Overall, the earnings indicate that Alibaba's primary eCommerce and cloud computing business remain strong and have considerable momentum. Yet, the stock is nearly 20% off its all-time high set in late-October. Ironically, many Chinese Internet stocks are actually trading at new highs based on the strength in China's economy and expectations that a President-elect Joe Biden's administration will lead to a relaxation in tensions between the U.S. and China.
Inside the Numbers
Alibaba saw 30% revenue growth compared to last year's same quarter and slightly topped expectations. There were many positive indications about the Chinese economy in the report as apparel sales were above pre-coronavirus levels. Additionally, Alibaba noted that it added 10% more customers to its platform for a total 757 million.
Even more impressive was Alibaba's cloud unit which saw a 60% increase in revenue. Management said it expects its cloud unit to become profitable by the end of the year.
Given that Amazon's
Stock Price Outlook
In addition to its cloud and eCommerce business, Alibaba has fintech exposure via Ant Group and a growing artificial intelligence (AI) division. This makes it more likely that Alibaba's growth will continue in the coming years.
Its recent dip could be a good buying opportunity. Although the Ant Financial delay is a setback, it doesn't meaningfully affect the value of Alibaba or Ant Financial's business. Compared to its U.S. counterparts, Alibaba is cheaper with a forward price to earnings ratio of 21. Despite being cheaper, it's growing faster with its 30% revenue growth.
Additionally, Alibaba is more dominant in its domestic market which may have more upside due to a larger, more undeveloped population. It's also more diversified given its exposure to eCommerce, cloud computing, and fintech.
The U.S. analogy would be some combination of Amazon and Paypal
