Alibaba stock price prediction 2025: BABA's PE is only 33 times?

Review Alibaba's digital economy has created a transaction volume of 1 trillion US dollars.

The revenue and profit growth in the past few years have been solid, relative to Tencent (700), Pinduoduo (PDD), and JD.com (JD).
　　

Why is the valuation of Alibaba (BABA) relatively undervalued, PE is only 33 times?

　　
Is there a chance to catch up?
　　
Is Alibaba (BABA) an ideal investment?

Compared with Tencent, Alibaba's business revenue sources are relatively concentrated, and most of them are related to online shopping.

Although the company's business includes core business, cloud computing, digital media and entertainment, innovative business, and others, for 2020 earnings, cloud computing only accounts for 8% of total revenue, digital media, and entertainment 5%, and innovative business and others account for 1% of these revenues.

Businesses that account for a fraction of the business are losing money. As for Alibaba's remaining 86% of its revenue, it is all about the industrial chain of online retail, wholesale, and logistics.

Alibaba's (BABA) 2020 financial report performed well. Alibaba's annual results for the year ended March 31 exceeded market expectations, and non-GAAP net profit was 132.48 billion yuan, an increase of 42% year on year.

Even if the first quarter was affected by the new coronary pneumonia, Alibaba's non-GAAP net profit growth still increased by 11% year on year, and the results were very good.

Looking back at Alibaba's revenue in the past few years, revenue growth in fiscal years 2018, 2019, and 2020 was 58%, 50%, and 35%, although revenue growth slowed, it is normal for Big Mac companies. Does it have "vital elements"?

I sorted out Alibaba's segment business revenue growth from 2018 to 2020 and found that except for the innovation business and other growth that accounted for 1% of Tencent's revenue, the growth of other parts has slowed down.

Despite this, Alibaba's cloud computing business still grows by 62%, and this part of the business still has great potential. Market research agency Canalys announced the fourth quarter of 2019 China's public cloud service market report. Alibaba Cloud ranked first in the market. The share rose from 45% in the third quarter of last year to 46.4% in the fourth quarter, far surpassing the second-placed 18% of Tencent Cloud.

Judging from Alibaba's performance trends, compared with other loss-making businesses, the cloud computing business has the opportunity to turn losses into profits as quickly as possible. The era of cloud computing has only just begun, and the cloud computing business will still have great growth in the future.

In the context of global water release, many Chinese Internet companies have reached record highs. But Alibaba seems to be slightly inferior, its price-earnings ratio is only 33 times, while Tencent has reached 45 times. Alibaba's revenue and profit growth are steady, and PE is cheaper than in other industries. Is it a good investment?
　　
Next, let me talk about Ali's prospects and dilemmas Tencent (700), Meituan (3690), JD.com (JD), and Pinduoduo (PDD) have soared. But Alibaba's stock price has stagnated, which reflects the fact that the market is worried that Ali's influence in the e-commerce industry will decline.
　　
WeChat completely monopolizes China's online social platforms, Momo, Tantan, and the rear lights are completely invisible, but there is no monopoly on Alibaba's business compared with WeChat. Although Alibaba has many businesses, China ranks first, For example, Taobao, Alipay, Alibaba Cloud, but the competitors facing these businesses are also very strong.

According to Goldman Sachs data, Alibaba’s e-commerce market including Taobao and Tmall’s GMV market share dropped from 75% in 2017 to 67% in 2019, while Pinduoduo’s market share in alliance with Tencent increased from 2% in 2017 Rose to 10% in 2019. As of the end of March 2020, Alibaba’s annual active consumers had increased by 15 million from the end of last year. Although it sounds good, JD.com and Pinduoduo are stronger. In the last quarter, JD.com increased by 25 million, and Pinduoduo increased by 43 million.

In terms of express delivery volume, the report pointed out that the express delivery volume of the Alibaba e-commerce platform accounted for the proportion of Zhongtong express delivery business, which fell from 80% in 2014 to 56% in the second quarter of 2019, and no further data was disclosed.

As for the proportion of pieces with a lot of fights, it rose to 20%. Here, we can deliberately burn a lot of money, plus WeChat traffic, which helped Pinduoduo to erode the market share of Ali's e-commerce. Also, the Douyin parent company, the Chinese science and technology giant byte beat, established a first-tier e-commerce department.

According to media reports, after July 1, Douyin is no longer linked to Taobao, which means that the huge traffic of Douyin will not be sent to Taobao. The two giant companies have the opportunity to change from partners to rivals.

Tencent has rapidly developed a new model of social e-commerce for small programs and has a slice of decentralization in the field of e-commerce. Therefore, Alibaba's e-commerce is in the situation of being enemies.

Next, let me talk about Ali's trend analysis. Recently, another reason for Alibaba’s pressure was due to market worries about SoftBank’s selling off 25% of Alibaba’s shares, and SoftBank Group’s Sun Zhengyi expressed his withdrawal from Alibaba (BABA).

The board of directors said that SoftBank will hold Alibaba as much as possible. The whole issue is not with Alibaba. It is just that when the company's stock price is high, Softbank may be able to sell less and have enough funds to solve the urgent problem.

Everyone will also be more tolerant of Alibaba's short-term negative factors, and more people are willing to accept the goods, but when the company's performance relative to its peers is ordinary, the negative news becomes obvious in the eyes of investors. Someone asked whether the increase in the valuation of Alipay’s parent company Ant Financial would help Alibaba’s share price?
　　
Reuters quoted sources as saying that Ant Financial is selling shares in a non-public way, with a valuation of US$200 billion. Alibaba holds 33% of Ant Financial. If Ant Financial is listed, will it have a positive impact on Alibaba's stock price?
　　
I believe that even if there is, it will not be too obvious. For example, China Ping An (2318) also holds 41% of Ping An Good Doctor (1833).
　　
Ping An Good Doctor (1833) was not profitable, but everyone only paid attention to its holding of HSBC (00005).
　　
As for whether the share price of Alibaba (BABA) can regain momentum, I will look at two major factors. First, it depends on whether Alibaba’s core business outside the business can maintain high growth and bring a new bright spot to the market. The second is that it depends on the process of the Hang Seng Index's inclusion in Alibaba (BABA), allowing new funds to drive the stock price.

The first point is more difficult to predict, and I cannot estimate it. As for the second point, the HSI includes Alibaba as a constituent stock of the HSI. If the Hang Seng Index is inspected in August and accepts Alibaba to be included in the index, and the weight reaches the upper limit of 5%, the Goldman Sachs Index expects that 1.3 billion US dollars will passively chase Alibaba. Alibaba (BABA) will also be revalued. Alibaba's (BABA) valuation will be closer to companies such as Tencent.

Of course, there is not much chance of keeping up completely in the short term, but it is not difficult for Ali to increase 5-10% this year. This reminds me of one thing. When Alibaba IPO, most of the market analysis was one-sided, Alibaba ( BABA) will outperform Tencent.

Alibaba's PE is much lower than that of Tencent. Alibaba's revenue and profit growth also outperformed Tencent. But it turns out that when views are one-sided, they usually don't come true. When this happens, you have to be careful about the reasons. Why is a company's PE cheap?
　　
is not unreasonable, I don’t think about why, but I think Alibaba is not bad. The growth of Alibaba's (BABA) cloud service is worth looking forward to. The new crown epidemic will accelerate the demand for Internet services. Alibaba can also benefit from it, and its performance is expected to be better than that of the old economic stocks.

Comments

Palantir stock forecast 2025: What kind of company is PLTR?

PLTR introduced today may be the most controversial company in the current market, not one of them. As a stock, he is the faith stock of many retail investors. Those who believe in it generally believe that its stock price can double at least ten times in the future. Catherine Wood, the president of the ARK Fund, nicknamed "the light of retail investors," continues to buy the stock, which is also highly sought after on the WSB forum; on the contrary, most analysts on Wall Street are not optimistic about its development. The average target price at the end of 2021 is still 10% lower than the current stock price. As a company, its revenue is growing steadily and rapidly, with an annual growth rate of about 30% per year. However, the company has never achieved profitability in the past 20 years since its establishment. As a high-tech enterprise, the company is full of various genius ideas and the top talents in the industry, but they are mostly engaged i...

Three stages of bull and bear markets!

The bull and bear markets of the stock market are traditional indicators of the business cycle. As an investor, distinguishing bull and bear markets in the stock market and grasping the long-term development direction of the market can avoid the impact of short-term market fluctuations and the impact of complex market information. For example, the market fluctuations brought by news information, the sudden and sharp drop in market prices, and the impact of investor sentiment have led to making wrong investment trading decisions. The stock market is in a bull market, most asset prices will continue to rise, and the stock market is in a bear market, most asset prices will continue to fall. Both bull and bear markets are divided into three stages, so how to tell whether the stock market is in a bull or bear market, and at what stage. S&P500 Index What is a bull market? In the first stage of the bull market, after the market economy was in recession, the stock price fe...

Teladoc stock forecast 2025: Is it time to buy TDOC?

TDOC's performance exceeded expectations. Why did the performance decline after the announcement? Teladoc (TDOC) reported quarterly earnings of US$0.13 per share, which exceeded the consensus estimate of a loss of US$0.57 per share. In the same period last year, it had a loss of US$0.4 per share. The earnings of this financial report far exceeded expectations. In the last quarter, people expected this telemedicine service company to lose 0.25 US dollars per share, but the actual loss per share was 0.27 US dollars, which was not as good as expected at the time. In the past four quarters, TDOC exceeded expectations twice. The management stated that the company's current momentum in various channels and regions should not be underestimated in the conference call. It has raised its annual revenue guidance to 20 million U.S. dollars, which is expected to be between 1.97 billion and 2.02 billion U.S. dollars. In the first quarter, the comp...

TSM Stock Forecast and Price Target 2021

Today, I will analyze TSMC stocks in-depth with you. In the semiconductor sector, TSMC has always been my most promising stock. TSMC has just announced its results for the fourth quarter of 2020. At the same time, there are new developments in the entire chip industry recently. Therefore, today I will combine the financial report and chips. The latest developments in the industry to analyze the trend of TSMC stocks, First of all, we analyze TSMC’s fourth-quarter and full-year 2020 financial reports to see what are the key points worthy of investors’ attention. First, TSMC’s fourth-quarter revenue and profitability are very good. Compared with the outlook for Q4 in Q3, the outlook at that time was US$12.4-12.7 billion, and the actual revenue was US$12.68 billion. Actual revenue As the upper limit of the outlook, the gross profit margin outlook is 51.5%-53.5%, while the actual gross profit margin is 54%, which is better than the outlook. The operating net profit margin is expected t...

NIO stock forecast 2025: 2021 Q1 report analysis

April 30, NIO announced the first quarter of the 2021 financial report. Revenue reached 7.98 billion yuan, a year-on-year increase of 481.8%, and a month-on-month increase of 20.2%; gross profit was 1.5548 billion yuan, a month-on-month increase of 36.2%, and last year was -167.5 million yuan; a net loss of 350 million yuan was significantly narrowed year-on-year and month-on-month. Various indicators show that NIO's performance in the first quarter of this year is very impressive. Gross profit margin exceeds 20% for the first time NIO’s Q1 car sales were 7.40058 billion yuan, a year-on-year increase of 489.8% and a month-on-month increase of 20.0%. The gross profit margin of automobile sales was 21.2%, exceeding 20% for the first time, a significant increase from -7.4% in Q1 of 2020 and 17.2% in Q4 of 2020. In addition, Weilai's Q1 comprehensive gross profit margin in 2021 will also reach 19.5%. The founder, chairman, and CEO of NIO sai...

The stock market entering a bear market？

On March 6, 2020, the US stock market continued its decline today after a few days of rebound. Is this the beginning of a bear market in the stock market? Next, let's analyze one important indicator of entering the bear market, Treasury bonds yield. What is the yield of Treasury bonds? Treasury bonds are a tool issued by the state to raise funds. When the bonds are issued, they promise to repay the principal and interest on a specified date. The ratio of the return of Treasury bonds to the principal invested is the return of Treasury bonds. The main factors affecting bond yield include coupon rate, maturity, face value, holding time, purchase price, and sale price. Rising bond yields and falling bond prices mean investors are selling bonds, turning to invest activities, or entering the stock market. In a healthy economic environment, the longer the Treasury bonds, the higher the bond yield. Because short-term bonds are more liquid, investors are willing to accept lower ...

Capital Flows Tracking Weekly

Release: January 27, 2021 The weekly Capital Flows estimate the industry's total, based on the report covering more than 98% of mutual fund and ETF assets. Collect actual mutual fund net new cash flows and ETF net issuance together monthly; therefore, there is a discrepancy between these weekly estimates and monthly flows. The data from the previous few weeks reflect revisions due to data adjustments, reclassifications, and changes in the number of fund reports. Mutual fund data represents the estimated value of net new cash flows, that is, new sales minus redemptions plus net exchanges, while exchange-traded fund (ETF) data represents net issuance, that is, net issuance minus total Redemption amount. This series does not include data on mutual funds that primarily invest in other mutual funds and ETFs that primarily invest in other ETFs.

How to judge the market entry signal?

buy sell Most people lose money when investing in stocks. One of the biggest reasons is that they buy stocks at the wrong time. Why did they buy the stock at the wrong time? Facts have proved that many people do not know that stocks only rise 1/4 times, and that is the easiest time to make money. And in another 3/4 of the time, making money is difficult, and losing money is easier. Today, I will share how to choose the right time to buy stocks. I hope you can see the final result because, in the end, I will share with you how to use simple technical indicators to help us find the exact input time. First of all, everyone must know a concept, whether it is a stock market or a stock, there are four stages. Let us take the stock market as an example. The first stage is called the "next stage". At this time, the market has just experienced a sharp decline, and most investors in the market are not interested in the stock market, because their memories are still stuck in t...

Many companies will China close in 2020?

Starting in March, all walks of life in China began to resume work. People stayed at home for more than two months. Many people's moods changed from tension to leisure, and now they are anxious. It's not just the bosses who are anxious. Many employees find that their rents and mortgages are still being paid, the holidays are extended, they can't go to work, and their salaries aren't. Whenever there is no money it is a big problem. More than 700 companies closed down in February, but getting fewer wages is also better than the company suddenly closing down. In February, more than 700 companies have closed down, and this number should be exceeded. Statistics show that more than 55% of catering businesses in China have resumed work, but compared to the same period last year, affected by the epidemic, 78% of catering companies have lost more than 100% of their operating income, and another 16% of them have lost over 70%. This year's sudden outbreak, the impact...

BABA stock forecast 2025: The failure of Ant Financial's IPO

Ant Financial’s IPO was canceled, causing Alibaba’s share price to fall, Alibaba has been unfavorable this year. First, the cancellation of Ant Financial's IPO indirectly caused Alibaba's stock price to fall, and now there is an antitrust investigation led by Alibaba, which caused Alibaba's stock price to plummet by 15% in a single day. From the highest point in October, the stock price of 319 dollars has fallen by as much as 30% to 222 dollars. From the perspective of K-line, Alibaba has reached the Oversold area, and it will rebound upward in the short term. From the perspective of valuation, Alibaba’s valuation is as high as US$388, which is 74% of the current share price of US$222. Value-added space, so it seems that whether it is viewed from the short-term K-line or the long-term valuation, now is a good time to buy the bottom of Alibaba. Before investing, I will analyze and analyze the root cause of the disadvantage of Alibaba this time, because if this problem is not...

FinanceLinkway

Search This Blog