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Alibaba is doing it well but the stock is declining while we are witnessing a divergence in EM and US tech

Alibaba is a great company. A chinese e-commerce giant I have collaborated with many year before it went public in the U.S. The firm have a strong fundamentals, but despite that, Alibaba has declined about 20 percent in the last 8 weeks.

This is very interesting because Alibaba grew revenues by nearly 60 percent, and I don`t think it will stop here at all. Nor is it expensive if we measure it with forward earnings which is about 32,4 right now. There must be something going on here.

Like we saw in Kohls a few days ago, maybe there is some profit taking here. Kohls has skyrocketed last 12 months. Up about 100 percent. But Alibaba has declined about 20 percent last two months.

I think it can be the fear of the coming trade war. There has been a carnage in the Chinese tech sector recently. We saw a collapse in Tencent. A company that lost more than Facebook`s drop. We also saw a big drop in JD.com following poor earnings.

What we are witnessing is a divergence in EM and US tech. Since June, the EM tech sector has accounted for about 40 percent in the value of EM equities. Both, the EM and the US tech sector has jumped about 50 percent to the end of June, but since then, the US tech sector is up by 5 percent, while the EM tech sector is down 6 percent.

This is very bad news for EM tech investors. JPM`s quant guru, Marko Kolanovic also spotted this bizarre phenomenon, and in a note he said that “the recent divergence in the performance of US Equities vs the rest of the world is unprecedented in history.”

Kolanovic also looks at price momentum which he finds is «positive for US stocks and negative for Europe and Emerging markets across all relevant look back windows, and this has never happened before.»

As Kolanovic summarizes: “buybacks are creating a shortage of US stocks, the Fed is creating a shortage of US dollars, and Trump`s trade wars and sanctions are further boosting the USD.”

You can clearly see how Alibaba reached an all-time high in the mid June, trading above $210, and then, alongside other Chinese tech stocks that has declined. The stock is also following the divergence trend.

All this is happening despite the fact that the firm is doing it well. The Amazon of China, are also operating three main sites like Taobao, Tmall and Alibaba. In addition, they have a cloud computing firm, and they grabbed 4 percent of the cloud computing market share last quarter.

Thats far beyond Amazon and Microsoft, but near IBM with 8 percent and Google with 6 percent, according to Synergy Research Group. Alibaba stock is up about 170 percent over the last three-year, but some investor fear that Alibaba can be negatively impacted by the ongoing trade dispute between the worlds two largest economies, which is reportedly starting to hit China harder than anticipated.

Alibaba stock is up about 170 percent over the last three years, which outpaced its industrys 96 percent.climb and the S&P 500s 50 percent jump. But the trade war can hit Alibaba more than we like to think. On top of that, the Chinese economy is slowing. The stock is up only 2,3 percent last 12 months, while S&P 500 is up 17 percent and its industry gained 37 percent.

Investors will await data on Alibabas cloud business, which is expected to nearly double YoY growth for its June quarter. Customer management revenue for Alibabas China Commerce Retail segment, which is driven by ads shown on Taobao and Tmall, rose 35 percent last quarter. The segment`s commisssion revenue, which is driven by Tmall, rose 39 percent.

Jack Ma must have done something right with its intime department stores and innovative Hema supermarkets, as well as Ele.me, which is set to merge with Alibaba`s Koubei local services JV and its Tmall Direct Import online store.

Alibabas China Commerce Retail segment rose more than 10-fold annually in June quarter. Cainiao is also contributing to Alibabas revenue growth.

«We belive the future of New Retail will be a harmonious integration of online and offline, and Hema is a prime example of this evolution that`s taking place,» Daniel Zhang, CEO of Alibaba Group said. «Hema is a showcase of the new business opportunities that emerge from online-offline integration.»

Alibaba Group Holding Limited is expected to report earnings on Thursday 23, 2018, before market open. The report will be for the fiscal Quarter ending June 2018, and the consensus EPS forecast for the quarter is $0,75 vs $0,94 for the same quarter last year.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Alibaba with a massive Monster revenue growth of nearly 50% in 2017

Alibaba went public in 2014. The company is one of the world`s biggest with a market cap of 308,96 billion dollars. Its businesses consist of core commerce, cloud computing, mobile media and entertainment, and other innovation initiatives.

Alibaba will go straight up from start today. Reason? The company is forecasting massive Monster revenue growth of nearly 50 percent in 2017. The target implies sales of up to $34,5 billion dollars, and this is the biggest underlying rise so far since its IPO in 2014.

 

 

The stock has gone straight up since its IPO in 2014 and the company is near its all-time high. Some investors are bullish but others are sceptical and warns of odd accounting and an opaque corporate structure.

Investors are divided in ways only stocks with strong charts and a shaky fundamentals tend to do.

To put the company in perspective, Amazones market cap is $478,81 billion. Amazons founder Jeff Bezos knew that the key to success in the market in electronic commerce was not to focus only on a bookstore.

Alibaba is more than a retailer. It also has Taobao, Tmall.com and Alipay to name a few. Over the past few years, it owns established businesses across commerce, cloud computing and media. So, the business model is very similar to Amazon.

Alibaba is the largest e-commerce player and cloud-computing provider in China. An exceptionally strong media empire that is underestimated with a strong growth outlook. Tmall TV is expanding. So are UCWeb, YouKu Tudou, Alibaba Music and Alisports.com in the category Media Entertainment.

Dimensional Fund Advisors LP purchased a new stake in shares of Alibaba Group Holding during the fourth quarter worth about $171,085,000. 35,17 percent of the stock is currently owned by hedge funds and other institutional investors.

Alibaba`s share price is $125,64 before the opening on Thursday. Goldman Sachs Group Inc reissued a «conviction-buy» rating and set a $135,00 price target on shares of Alibaba in a report on Friday, March 17th.

Watch out for Alibaba from start on Thursday. It will skyrocket.

 

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Alibaba IPO

 

I wrote about the company last year and now it is time to do it again. Alibaba Group Holding Ltd is a big fish which is preparing to launch perhaps the largest U.S stock listing ever of a Chinese company.

alibaba logo

Personally, I have been dealing with Alibaba for many years now, but most of the people don`t have a clue of what it is. Alibaba is a mix of Amazon, Ebay, Paypal and Google. The difference between Amazon and Alibaba is that Alibaba is connecting buyers and sellers, while Amazon buy from suppliers and sell the products to the customers.

Alibaba is more like Ebay Inc. Their role is more like a middleman role and does not operate like an auction. Taobao is Alibaba`s biggest website. It is a gigantic Chinese bazar with about 760 million product listings from 7 million sellers.

Merchants pay Alibaba for advertising and other services from Alibaba. They do not pay them to sell their own products. The no-fee model is part of Taobao`s appeal in China. Just like Google, the ads from merchants appear with Taobao`s product-search results.

Taobao is designed for small businesses, but Alibaba`s Tmall is another shopping site that is designed for bigger brands like Nike and Apple. Tmall has about 70.000 merchants. They charges each seller a deposit and an annual fee, as well as a commission on each transaction.

Taobao and Tmall accounts for more than half of all parcel deliveries in China. In 2012, the combined transaction volume of Taobao and Tmall topped $163 billion. That is more than Amazon and eBay combined!

Alibaba`s revenue is 1/10 of Amazon`s. The Chinese company doesn`t sell products like Amazon on its site. Alibaba`s revenue rose 51% (third quarter) to $1,78 billion, while Amazon posted revenue of $17,09 billion and a loss of $41 million in the same quarter.

Alibaba`s profit margin is 44,6% and net profit was $792 million. They could raise about $15 billion from their U.S IPO. This can move another stock; Yahoo, which own a stake of 24% in Alibaba.

It can move Yahoo before and after the IPO. Like the Facebook IPO, they may «suck the air» of the markets. Yahoo has a market cap of $36 billion. It`s early in the process, but it is estimated that the IPO range is about $160 billion.

Alibaba remains by far the biggest player in China`s fast growing e-commerce market. Their biggest competitor Tenchent Holdings Ltd is a powerful competitor because of their popular WeChat mobile-messaging application.

Going public will keep Alibaba in the race in the global market. Yahoo is down -2,0% today and -11,2% YTD. This can change because Yahoo is a takeover candidate. This is one of the pioneers of the web.

Yahoo is a great success story of the Net. The stock has returned 21% annually since early trading in 1996. The company have survived two bear markets to date, and was one of the tech companies in the tech bubble in the late 1990`s.

Report today:

08:30 AM ET Core Durable Goods Orders m/m
08:30 AM ET Durable Goods Orders m/m
09:45 AM ET Flash Services PMI
10:30 AM ET Crude Oil Inventories

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

 

 

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