Alibaba could be an outperformer in 2017, a year in which most banks are expecting the broader stock market to post only incremental gains, according to Barron’s. Recently, Morgan Stanley conveyed to its clients that the stock, currently trading around $92, has around 40% upside.
Trump factor to have a minimal impact?
Investors might think that Wall Street is creating hype around the stock in order to sell it to them. Many are worried that President-elect Donald Trump will put in place protectionist policies that will affect China’s market. But that view is too cynical.
The Trump factor might impact Alibaba, but the company is more than a Chinese version of eBay that sells almost everything online. The company will stand out in the Chinese e-commerce market, cloud computing, and maybe even the financial services market.
Since its founding by Will Thomson and Chip Russell in June 2016, the Massif Capital Real Asset Strategy has outperformed all of its real asset benchmarks. Since its inception, the long/short equity fund has returned 9% per annum net, compared to 6% for the Bloomberg Commodity Index, 3% for the 3 MSCI USA Infrastructure index Read More
“In many ways, the company is acting like a corporate-nation that is using its organizational strength, and money, to redefine the world,” says Barron’s.
In a report released on December 7, Morgan Stanley’s Grace Chen and team stated, “We believe that Alibaba is in the early stages of unlocking the value from what we view as its most valuable asset – a rich database that continues to accumulate from its well-controlled and extensive closed-loop ecosystem, through advancements in data technology.”
The investment bank stated that Alibaba is worth $130 per share. This target reflects $114.90 for its e-commerce business, $7.80 for its strategic investments, and $7.70 for its Ant Financial Unit.
Alibaba set to rule Southeast Asia
Recently, Jack Ma entered into an agreement with Thailand Deputy Prime Minister Somkid Jatusripitak to help the country’s small- and medium-sized businesses succeed in e-commerce. This is Ma’s third meeting with Thai officials since Thai PM Prayut Chan-o-Cha asked him during the G20 summit to help small- and medium-sized enterprises develop their e-commerce businesses.
In just a year, Alibaba has made a presence across Southeast Asia, and now, the company is looking to tap the regions’ 620 million population, and in particular, the 250 million smartphone users who are more inclined to use mobile technology to buy products online. Experts think that the company has the means to do that.
Marie Sun, an analyst at Morningstar Investment Service, says that compared to Amazon, Alibaba’s business model is more suitable in Southeast Asia. The region with different governments and culture is making it difficult for Ama