Alibaba Group Holding Ltd Begins To Regain Investor Trust

0

Alibaba shares have struggled since the company revealed that it is at the center of an investigation by the U.S. Securities and Exchange Commission last month. However, it looks like investors are starting to feel a little reassured as the Chinese online retailer’s stock climbed on Tuesday, its first-ever Investor Day.

Play Quizzes 4

Alibaba expects strong sales growth

As part of the presentations for its Investor Day, Alibaba released revenue growth outlook for fiscal 2017 sales, excluding recent acquisitions. The online retailer expects revenue to grow by 36% or more, which is better than what Stifel analysts were predicting but worse than the consensus of 38.6%. However, Stifel analyst George Askew and team believes this is because some of the estimates that are included in the consensus are factoring in revenues from some acquisitions. Including the Youku Tudou acquisition and investment into Lazada, Alibaba expects fiscal revenue growth to exceed 38%.

Alibaba also said that so far this quarter, gross merchandise volume has grown 22%. The company also said that after the first quarter, it will stop providing gross merchandise volume results except annually.

Exodus Point Outperforms As Rates Trading Profits Jump [Exclusive]

Value Bin Default RatesMichael Gelband’s Exodus Point launched in 2018 with $8.5 billion in assets. Expectations were high that the former Millennium Management executive would be able to take the skills he had learned at Izzy Englander’s hedge fund and replicate its performance, after a decade of running its fixed income business. The fund looks to be proving Read More

Another big theme expressed by CEO Jack Ma is that Alibaba is a data company rather than just an online retailer. He explained that they use transactions to collect data, which then is used to deliver products and services to consumers. They continue to focus on globalization, which is enabling everyone to buy and sell globally; Rural Taobao, which includes expanding to 100,000 rural Chinese villages, and AliCloud.

The executive also raised some eyebrows when he suggested that the fake products that are sold on their online marketplaces are better than the real products, although he emphasized that they will continue to fight sales of fakes, which it has been blasted for in the past.

Rural Taobao in focus

Analysts who attended the three-day Investor Day event visited Alibaba’s Rural Taobao project. Rural Taobao includes distribution centers at the county level which host approximately 100 merchants as a logistics hub. The Stifel team explain it as “if eBay operated a facility with dozens of eBay sellers on the upper floors and a FedEx micro-hub on the ground floor.” Currently the company has 300 centers and aims to have 1,000 in three to five years. It took analysts to the center located in Deqing County where the government owns the building, Alibaba uses the first floor rent-free, and merchants on the upper floors pay rent to the government.

In the near term, the Stifel team sees the strategy as defensive because it puts the “Alibaba Flag” in all parts of China for the purpose of defending its turf by keeping the competition from building out. In the long term, they see Rural Taobao as being offensive because offers “a strategic and valuable local distribution point for all-things Alibaba.”

Shares of Alibaba climbed by as much as 3.02% to $77.73 during regular trading hours on Tuesday.

Updated on

Michelle Jones is editor-in-chief for ValueWalk.com and has been with the site since 2012. Previously, she was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Email her at Mjones@valuewalk.com.
Previous article Capcom Taking New Direction With Resident Evil 7 [TRAILER]
Next article How Wells Fargo Is Reaching The Digital Customer

No posts to display