Alibaba – Riding the Connected Society tailwind to success
Most U.S. investors tend to keep their purview on domestic companies and their shares, but there is a problem with that strategy. That limited gaze means missing out on opportunities outside the U.S. that are benefitting from our thematic investing themes. For example, when most folks think of the company riding our Connected Society investing tailwind, Amazon comes to mind. It’s a good answer, but when we look at the Rising Middle Class in Asia, Amazon (AMZN) has yet to meaningfully crack that market. Meanwhile, Alibaba (BABA) is embracing a number of the same strategies as Amazon — grocery, artificial intelligence, and cloud computing – and is poised to deliver stellar growth while doing so. While Amazon is winning the day by being the low-cost price leader and catering to the Cash-Strapped Consumer and the Falling Middle Class, Alibaba’s audience is seeing rising disposable incomes.
It appears Alibaba is looking toward big things yet to come, predicting a revenue increase of 49 to 53 percent rise in the current fiscal year. Revenue growth for the September quarter came in at 61 percent, its fastest rate as a public company, while mobile spending surged and its cloud division continues to grow.
What’s Next
The most immediate answer to that question is Singles Day, the largest shopping event on the Chinese calendar. Last year, the event brought in approximately $18 billion in Singles Day sales, crushing Black Friday and Cyber Monday put together.
More broadly, Alibaba has recently cast its net farther and wider, with billions in investments and a newfound focus on supermarket and department store retail, artificial intelligence (AI) and cloud computing. Revenue from Alibaba’s cloud computing business — a new area in which it will find itself in direct competition with its American counterpart Amazon — nearly doubled in the most recent quarter.
Source: eCommerce Website Alibaba’s Earnings Are Up | PYMNTS.com
