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Globe and Mail
3 hours ago
- Business
- Globe and Mail
Where Will Alibaba Stock Be in 10 Years?
Alibaba (NYSE: BABA), the largest e-commerce and cloud company in China, went public at $68 per share on Sept. 18, 2014. It raised $25 billion, making it the largest IPO in history at the time, and it held that record until Saudi Aramco's $29.4 billion IPO in 2019. Alibaba's stock closed at a record high of $310.29 on Oct. 27, 2020. That marked a 356% gain from its IPO price. At the time, investors were dazzled by the robust growth of its e-commerce and cloud businesses, as well as its rapid expansion into adjacent markets. But today, Alibaba's stock trades at about $114. China's antitrust regulators cracked down on Alibaba's e-commerce business by forcing it to ax exclusive deals with merchants, rein in its promotions, and seek regulatory approvals for all its future investments and acquisitions. All of that pressure, along with a record $2.8 billion fine, eroded its defenses against aggressive competitors including PDD and At the same time, China's soft economic growth forced many companies to rein in their cloud spending. Alibaba also scrapped a long-awaited IPO for its fintech affiliate Ant Financial in 2020, and it also walked back plans to spin off cloud, logistics, and Freshippo grocery units in 2023 and 2024. Investors sensed its high-growth days were over, and its stock stumbled. Those setbacks were worrisome, but can Alibaba's stock bounce back over the next 10 years? What are Alibaba's core growth engines? Alibaba splits its business into seven groups. The Taobao and Tmall Group hosts its two largest online marketplaces in China, the Alibaba International Digital Commerce Group handles its overseas and cross-border e-commerce marketplaces (including Lazada in Southeast Asia, Daraz in South Asia, Trendyol in Turkey, and AliExpress for its overseas customers), and the Cloud Intelligence segment houses its cloud infrastructure platform and related AI services. Alibaba's Cainiao group provides both first-party and third-party logistics services, its Local Services group provides localized delivery services within China, and its Digital Media and Entertainment Group handles streaming video, audio, and film production businesses. Lastly, the "All Others" segment operates the company's brick-and-mortar stores and non-core digital platforms. In fiscal 2025, which ended this March, Alibaba's revenue rose 6%. All seven of its groups grew year over year, while its international digital commerce, cloud intelligence, and local services groups posted double-digit revenue gains. Segment FY 2025 Revenue (USD) Growth (YOY in CNY) Taobao and Tmall Group $61.99 billion 3% Alibaba International Digital Commerce Group $18.23 billion 29% Cloud Intelligence Group $16.27 billion 11% Cainiao Smart Logistics Group $13.96 billion 2% Local Services Group $9.24 billion 12% Digital Media and Entertainment Group $3.07 billion 5% All others $28.43 billion 7% Total $137.3 billion 6% Data source: Alibaba. YOY = Year-over-year. What are Alibaba's near-term catalysts? Alibaba expects its overseas e-commerce marketplaces, cloud infrastructure platform, and ongoing upgrades for Qwen, a new family of large language models for new generative AI applications, to fuel its near-term growth. The company's AI-related revenue could surge over the next few years as more companies upgrade their AI capabilities. As for its core Chinese e-commerce business, Alibaba plans to upgrade Taobao's live streaming features and peddle more discount goods to keep up with PDD and ByteDance's Douyin, known as TikTok overseas, as the macro headwinds curb consumer spending. This segment won't become a roaring growth engine again, but its stabilization is crucial for Alibaba's future. China's economy could also stabilize and grow again if it reaches a mutually favorable trade deal with the United States. What are Alibaba's long-term catalysts? Since Alibaba no longer plans to spin off most of its groups as independent companies, observers might see the company integrate its cloud, AI, logistics, delivery apps, and brick-and-mortar stores more deeply into domestic and overseas e-commerce marketplaces. It could also roll out more advertising and e-commerce services across its own digital media ecosystem -- which includes the streaming video platform Youku, its streaming music service AliMusic, and its AliOS smart TV platform. In other words, Alibaba's high-growth days might be over, but its businesses could converge and drive growth as a diversified retail and tech giant. According to Mordor Intelligence, the Chinese e-commerce market could still expand at a CAGR of 10% from 2025 to 2030. Grand View Research expects China's public cloud market to grow at a CAGR of 23% from 2024 to 2030. Staying at the top of these two markets, even as a maturing leader, could ensure its long-term growth. Those secular trends indicate Alibaba still has plenty of room to grow, even if it faces challenging macro, competitive, and regulatory headwinds. Conservatively assuming it grows EPS at a CAGR of 10% from 2025 to 2035, and its stock still trades at 11 times forward earnings by the beginning of the final year, Alibaba's price could more than double to about $257 over the next decade. That would be a decent gain, but it would still be well below its all-time high from 2020. Should you invest $1,000 in Alibaba Group right now? Before you buy stock in Alibaba Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Alibaba Group wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $828,224!* Now, it's worth noting Stock Advisor 's total average return is979% — a market-crushing outperformance compared to171%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 2, 2025
South China Morning Post
2 days ago
- Business
- South China Morning Post
Why China's problem of cutthroat competition demands the world's attention
When Joseph Schumpeter coined the term 'creative destruction', he might not have realised just how destructive unrestrained competition could be. That is the paradox at the heart of China's recent economic success. Advertisement On Monday, People's Daily ran an editorial , calling for neijuan or involution – a self-defeating cycle of excessive competition – to be nipped in the bud. For China's Communist Party mouthpiece to publicly acknowledge the issue signals its severity. Involution has become an economic undercurrent shaping what we are seeing, from industrial strategy to global trade dynamics. For example, around the time the People's Daily article was published, BYD slashed prices on 22 vehicle models by up to 34 per cent, with its Seagull model now selling for just 55,800 yuan (US$7,750). Other competitors are likely to follow suit shortly. Headlines largely focused on the stock price of carmakers. However, the real story is that BYD could have just priced an entire cohort of Japanese, Korean and European cars out of relevance. Let's not forget the knock-on effects: foreign carmakers facing shrinking margins and slowing innovation budgets could end up withdrawing from electric vehicle (EV) battles they cannot win. Then there are Meituan and , both stepping up subsidies, fighting for user growth in an already saturated food delivery market. This is not because demand has collapsed but because competition has become pathological. Businesses are stuck in a race to the bottom. Advertisement Classical economic theory suggests profits will converge to a normal level in the long run, but such intense competition means supernormal profit plunges quickly while subnormal profit takes much longer to converge upwards. Margins get relentlessly compressed. Incentives trigger an excessive response. Everyone chases the same opportunity – often recklessly.
South China Morning Post
4 days ago
- Business
- South China Morning Post
Chinese robotics star Agibot adds JD.com as investor, joining Tencent as Big Tech backer
Chinese e-commerce giant has recently become a shareholder in Tencent Holdings -backed robotics star AgiBot, as China's robotics industry has become one of the most closely watched sectors this year among investors and tech giants. AgiBot, also known as Zhiyuan Robotics, was established in 2023 by a founding team that included Huawei Technologies veterans and professors. The company recently added JD subsidiary JD Technology as a shareholder of its main entity, Shanghai Zhiyuan New Innovation Technology, according to a company record change on May 22 from registry information provider Aiqicha. Another new shareholder is Shanghai Embodied Intelligence Venture Fund, formed just last month with backing from the Shanghai government. AgiBot has set a record in total funding among its Chinese peers, according to a Thursday post by Shanghai State-owned Capital Investment, which owns the Shanghai Embodied Intelligence Venture Fund. Following the investment, which saw each new shareholder take a 0.75 per cent stake in AgiBot, the Shanghai-based robotics start-up boosted its registered capital by 2.7 per cent to 82.6 million yuan (US$11 million), according to Aiqicha data. It is not clear whether the start-up has launched a new funding round. Neither JD nor AgiBot immediately responded to requests for comment on Friday. Shanghai Embodied Intelligence Venture Fund could not be reached for comment.
South China Morning Post
6 days ago
- Business
- South China Morning Post
Hong Kong stocks slip as PDD's profit slump rattles Alibaba, e-commerce rivals
Hong Kong stocks dropped after a poor report card from Chinese e-commerce platform operator PDD Holdings rattled industry peers including Alibaba Group Holding, suggesting discounts to attract consumers will hurt near-term earnings outlook. Advertisement The Hang Seng Index fell 0.6 per cent to 23,254.45 at the local noon trading break on Wednesday, while the Hang Seng Tech Index dropped 0.4 per cent. On the mainland, the CSI 300 Index and the Shanghai Composite Index both added 0.1 per cent. Alibaba Group Holding fell 1.9 per cent to HK$115.80 and slipped 1.3 per cent to HK$126.70, while Meituan lost 1.3 per cent to HK$130.40. Among other loss leaders, Hansoh Pharmaceutical slumped 2.5 per cent to HK$25.90, insurer AIA weakened 2.7 per cent to HK$63.45 and chipmaker SMIC retreated 2.2 per cent to HK$40.95. PDD, the owner of Pinduoduo and Temu platforms, reported a 47 per cent slump in first-quarter earnings as growth in sales slowed, both trailing market consensus, a filing on Tuesday showed. Its Nasdaq-listed shares tumbled as much as 18 per cent in New York overnight. 11:13 How is betting on AI to transform e-commerce How is betting on AI to transform e-commerce Sub-par results from some bellwether companies may upend a rebound in the Hang Seng Index, which has risen 17 per cent from an April low. As fears on the US-China tariff war recede, analysts said earnings reports from more Hang Seng Index members would have a bigger sway on market direction.
South China Morning Post
6 days ago
- Business
- South China Morning Post
Hong Kong stocks slide as PDD's profit slump rattles Alibaba, e-commerce rivals
Hong Kong stocks dropped after a poor report card from Chinese e-commerce platform operator PDD Holdings rattled industry peers including Alibaba Group Holding, suggesting discounts to attract consumers will hurt near-term earnings outlook. The Hang Seng Index fell 0.3 per cent to 23,309.49 at 10.17am local time on Wednesday, while the Hang Seng Tech Index dropped 0.2 per cent. On the mainland, the CSI 300 Index slipped 0.1 per cent and the Shanghai Composite Index retreated 0.2 per cent. Alibaba Group Holding fell 1.2 per cent to HK$116.60 and slipped 0.9 per cent to HK$127.10 while Meituan lost 0.8 per cent to HK$131.20. Among other loss leaders, Hansoh Pharmaceutical slumped 2.8 per cent to HK$25.80 and insurer AIA Group weakened 1.8 per cent to HK$64. PDD, the owner of Pinduoduo and Temu platforms, reported a 47 per cent slump in first-quarter earnings as sales cooled, both trailing market consensus, a filing on Tuesday showed. Its Nasdaq-listed shares tumbled as much as 18 per cent in New York overnight. Losses were contained as companies in other hot industries showed resilience. Short-video platform operator Kuaishou Technology rallied 4.5 per cent to HK$51 after first-quarter revenue exceeded expectations. Xiaomi advanced 2.5 per cent to HK$52.80 after profit beat consensus on robust smartphone and electric vehicle sales. Other major Asian markets rose, tracking the biggest gain in US stocks in more than two weeks following a recovery in consumer confidence. Japan's Nikkei 225 climbed 0.6 per cent, while South Korea's Kospi jumped 1.7 per cent and Australia's S&P/ASX 200 added 0.2 per cent.
