In the past, when you heard the words Ali Baba, the first thing that would come to mind naturally is the character from the Arabian literature One Thousand and One Nights. You do not necessarily need to be well versed with the tale or with the piece of literature for it to create a certain resonance in the back of your mind. With its signature phrase ‘Open sesame’ it is known the world over. And that is precisely why the founders of the Alibaba Group Holding Limited, chose it as an iconic name, because of its universally-appealing significance which is instantly recognizable across the globe. And so too has the become of this Chinese multinational e-commerce, retail, technology, internet and Artificial Intelligence conglomerate founded in 1999 by 18 people led by the stalwart known as Jack Ma, a former English teacher from Hangzhou, China.
From the get-go, the company’s founders shared a belief that the internet would level the economic playing field by enabling small enterprises to leverage innovation and technology to grow and compete more effectively in the domestic and global economies. Since launching its first website helping small Chinese exporters, manufacturers and entrepreneurs to sell internationally, Alibaba Group (BABA) has grown into a global leader in online and mobile commerce. This behemoth of a company provides consumer-to-consumer, business-to-consumer and business-to-business sales services via web portals, as well as electronic payment services, shopping search engines and cloud computing services. It owns and operates a diverse array of businesses around the world in numerous sectors, and is named as one of the world’s most admired companies by the American business magazine Fortune.
Now, let us discuss a bit about the company’s performance. At the closing of the market on the day of its initial public offering (IPO) – US$25 billion – the world’s highest in history, 19 September 2014, Alibaba’s market value was US$231 billion. As of June 2018, Alibaba’s market cap stood at US$542 billion. It is one of the top 10 most valuable and biggest companies in the world. In January 2018, Alibaba became the second Asian company to break the US$500 billion valuation mark, after Tencent. As of 2018, Alibaba has the 9th highest global brand value.
With operations in over 200 countries, Alibaba is the world’s largest retailer, one of the largest internet and Artificial Intelligence companies, one of the biggest venture capital firms, and one of the biggest investment corporations in the world. Its online sales and profits surpassed all US retailers (including Walmart, Amazon and eBay) combined since 2015.
Now, onto the recent developments of this global superpower. The shares of this Chinese e-commerce juggernaut are up 34% over the past year and are poised to rise even higher despite having global operations amid an escalating trade war. Argus’ top analyst Jim Kelleher reckons that the stock indeed is undervalued, and this stock, which doubled last year is likely to move higher and higher, coming from a seasoned analyst with a 72% success rate. This is definitely a point to note, particularly if you are interested in investing in overseas shares.
Moreover, Alibaba’s cloud-computing business, which brought in 5% of the company’s total revenue in fiscal year 2018, saw year-over-year growth of 101%. Recently, it has outperformed major players in the cloud computing field including Amazon, Microsoft and Google. Alibaba’s brick-and-mortar retail and wholesale sites also provide ample opportunity for future growth, considering the under-built nature of China’s physical retail infrastructure, especially in smaller cities. Over the past three years the company has been grabbing up stakes in grocers and electronics chains, including electronics retailer Suning, Intime Retail and Sun Art, one of China’s largest grocery chains.
Meanwhile, Alibaba is also building its own chain of stores called Hema Xiansheng, which offers customers a coalescence of a fresh-food market, a restaurant and home delivery facilities. While helping the company grab a slice of the 84% of China’s physical goods sales that still take place offline, these brick-and-mortar sites also create more points of contact with customers, allowing them to amass even more amounts of user data, according to the New York Times.
It’s also not just in China that Alibaba is expanding. The company recently doubled its investment in Southeast Asia, investing another $2 billion in its Singapore-based e-commerce subsidiary Lazada Group according to the Wall Street Journal. Notably, Southeast Asia is home to a population of around 600 million and its e-commerce market has grown by a rate of more than 40% annually since 2015, bringing in $10.9 billion in revenue in 2017. By 2025, the market is expected to grow to $88.1 billion. Staggering milestones of growth are those that you should keenly watch as an investor or a broker for international trading.