It seems Alibaba’s record Singles Day sales pleased analysts much more than investors. Shares of the Chinese online retailer haven’t changed much and, in fact, have trended down slightly since the company’s announcement. Analysts are starting to weigh in on the numbers.
Alibaba’s FMV hits $14 billion
Alibaba reported that its total merchandise volume on Singles Day (Nov. 11), which is China’s biggest shopping day of the year, reached $14.3 billion this year. That marks a new record, not just for Alibaba itself but for the e-commerce industry as a whole, and a 54% year over year increase. Wall Street had been expecting Alibaba to move about $13 billion in gross merchandise volume on Singles Day.
Yost Partners was up 0.8% for the first quarter, while the Yost Focused Long Funds lost 5% net. The firm's benchmark, the MSCI World Index, declined by 5.2%. The funds' returns outperformed their benchmark due to their tilt toward value, high exposures to energy and financials and a bias toward quality. In his first-quarter letter Read More
Cantor Fitzgerald analyst Youssef Squali and team thought the strong performance would allay investors’ fears that the company will be heavily weighed down by the weakened macroeconomic climate in China. They also see it as a positive data point going into Alibaba’s December quarter earnings results, noting that by comparison, eBay moved $19.6 billion in gross merchandise volume worldwide for the entire September quarter.
Further, Alipay processed 710 million transactions, which peaked at 140,000 transactions per second. Alibaba reported also that Cainiao Logistics handled 467 million orders. The Cantor Fitzgerald team pointed out that the company beat expectations for Singles Day sales last year as well. They have a Buy rating and $90 per share price target on Alibaba.
Alibaba still growing mobile sales
Stifel analyst Scott Devitt has a Buy rating and $94 per share price target on Alibaba. He was impressed by the Singles Day results, noting that the online retailer’s gross merchandise volume passed last year’s record in less than 12 hours. He and his team estimate that Singles Day sales made up about 9.1% of the third quarter of fiscal 2016’s total gross merchandise volume and 2.9% of the full fiscal year’s volume. Those numbers compared to 7.5% of last year’s third quarter and 2.4% of the full year’s volume.
They are especially positive on the growth in mobile sales, as mobile made up 68% of total gross merchandise volume, a significant increase from last year’s 42.6%. They believe that speeding up the transition to mobile will enable Alibaba to offset near term declines in take rates on desktop computers while also making monetization more efficient through new apps, ad formats, and tools for sellers.
Alibaba looks overseas
The Stifel team also noted that Alibaba pushed for more participation outside China as well this year through various promotions. The online retailer also partnered with more than 30,000 brands from 25 countries for discounts. Alibaba reported that the total gross merchandise volume generated across borders during the first two minutes of Singles Day surpassed last year’s total cross-border volume during the entire 24 hours.
They believe the international efforts are important for pushing long term growth. In the next few months, Alibaba is planning to expand its presence abroad, particularly in the U.S. and Europe. CEO Jack Ma is aiming for half of their total revenue to come from their international operations.
Shares of Alibaba dipped today, falling by as much as 0.28% to $79.63 per share in afternoon trading today.