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

Coinbase stock forecast 2025: Negative for two consecutive days

For investors in the currency circle, these two days are destined to be an uneasy day. First, the Republic of El Salvador officially regarded Bitcoin as a legal currency for trading, and then Bitcoin experienced a wave of flash crashes. The price once plummeted from $52,800 by 19% to $42,900. Finally, the Bitcoin exchange Coinbase was negative for two consecutive days. Let me talk about the fact that El Salvador uses Bitcoin as a legal currency. To attract more foreign investment and provide lower-cost financial and foreign exchange services, the Salvadoran government-approved Bitcoin as a legal currency as early as June this year and decided to officially implement this currency on September 7, which is yesterday. policy. The government plans to distribute $30 worth of bitcoin to residents who have registered for e-wallets, with a total investment of up to 75 million U.S. dollars. But yesterday’s implementation results showed that the start of this plan was not smooth...

4 George Soros advice to investors!

Who is George Soros? George Soros is a Hungarian-born Jewish businessman. It is one of the most influential investors in the world. In 1969, the Double Eagle Fund was established for Arnhold & S. Bleichroeder, an investment management company. In 1973, Soros and his assistant Rogers left Bleichroeder to co-found Soros Fund Management. In 1979, the well-known Quantum Fund was established and continued to make profits. In the Asian financial turmoil in 1997, George Soros sniped the Thai baht and the Hong Kong dollar, which was frightening. Learning from the experiences of successful people can benefit a lot. Here are 4 tips George Soros gave investors. First, to be successful, you must have ample free time. Most people want to be rich, but not everyone realizes the importance of free time. Many people spend a lot of time working to accumulate wealth, sleep, and forget. Set the goal to complete the work indicated by the superior, or the needs of business partners. But they hav...

Shopify stock forecast 2025：Is it worth buying?

In the last year, the stocks rose relatively well. Another sector is e-commerce. Whether it is Amazon, Alibaba, JD.com, Pinduoduo, SEA or vertical e-commerce platforms Etsy and Chewy, all of them have experienced huge gains, while another category has benefited from the e-commerce sector. The company is a website building tool company such as Shopify BigCommerce Holdings. Today I will talk about shopify, the leader of website building tools. First, let's briefly talk about shopify's business model. To put it simply, shopify is a fool-like website building platform. In the past, when a company wanted to build a corporate website, it generally needed to find a dedicated person to design and maintain the website. If you want to add shopping functions to the website, the cost of building the website will also increase. This is true for many small businesses and individual businesses. A very difficult thing. Shopify uses the SAAS model to provide websit...

Will the Great Depression make a comeback?

the Great Depression On March 21, 2020, the United States already had initial unemployment data. Exceeding market expectations, the number of applicants reached 3.28 million, a record high. The current unemployment situation in the United States. Before March 7, employment in the United States was not affected by the epidemic. In the week of March 7, the number of people applying for unemployment benefits for the first time in the United States was 211,000, a decrease of 4,000 compared to the previous week. It is still healthy. This shows that the United States is in a good employment track range. The actual data began to fluctuate, that is, the data for the week of March 14, the number of people applying for relief reached 282,000, a slight increase. On March 21, the number of people applying for unemployment benefits soared to a record high this week. 1.7 million people have far exceeded expectations, and market expectations are about 1.5 to 1.7 million people. It can be said...

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...

Barrick Gold stock price soars after Warren Buffett's buys a stake?

Has Buffett bought gold ? Buffett has not changed. Buffett does not want to hold physical gold, but he has never said that he will not buy shares in gold mining companies. Looking at the entire market, there are not many stocks that fit Buffett's trading. And Barrick Gold Company is just one of them. Buffett bought nearly 21 million shares, and the current share value is $563 million. We now look at the underlying logic of Buffett's purchase of Barrick Gold stock. Compared with physical gold ETFs, gold mining companies can respond positively to market conditions. There are financial reports to analyze, With dividends and stock repurchase plans, gold mining companies have the right to reward shareholders through capital return plans. In contrast, the physical gold ETF has no gains. The market generally believes that it is still in the upward cycle of gold prices . The current international environment is one where black swans emerge one after another. While paying att...

The Federal Reserve implements interest rate hikes or cuts？

Generally speaking, the Federal Reserve implements interest rate hikes or cuts. Interest rate rises are austerity monetary policies, and interest rate cuts are a loose monetary policy. When the rate hike cycle begins, it indicates that the Federal Reserve is optimistic about the future economic outlook, economic data shows a positive outlook, and market sentiment is optimistic. To avoid excessive economic growth, the Federal Reserve has implemented austerity monetary policy and implemented interest rate hikes. When the interest rate cut cycle begins, it means that the Federal Reserve is bad on the future economic outlook, the economic data shows a bad trend, and the market is pessimistic. To stimulate economic growth, the Federal Reserve has implemented a loose monetary policy and implemented interest rate reductions. Correlation between the S & P 500 and Federal Reserve interest rates Historical data from the S & P 500 shows that when the rate hike cycle begins, the sto...

INTC stock forecast 2025: Intel's acquisition of SiFive

SiFive, a chip design start-up company based on the RISC-V instruction set architecture, has received an acquisition intention from investor Intel. A person familiar with the matter, who asked not to be named, said that Intel has offered to buy SiFive for more than $2 billion. RISC-V with x86 and Arm As we all know, Intel dominates the industry leader in x86 architecture chip technology, while SiFive focuses on open-source RISC-V technology and employs several founding members of the RISC-V architecture. For a long time, the field of CPU instruction set architecture has been dominated by x86 and Arm. Since RISC-V was born at the University of California, Berkeley in 2010, it has gradually formed a certain competitive landscape with Arm after more than ten years of development. With the gradual refinement of the application field, the model of one chip making the world has become a thing of the past. Facing the hot AI and Internet of Things market, RISC-V i...

The signal that the stock market has peaked?

the stock market Although I know how to judge when the bear market is over and when I should buy at the bottom, I still don't know how to judge the selling at the top. I'm afraid I don't know when to leave the market after buying stocks in the future. If you have also tried to avoid the crash, stock market crash, and even bear market, or always hold stocks at these times. These four tricks are based on my experience in the stock market for more than 10 years. They help me hold cash early before many market declines, so I suggest that you must see the end. It is likely to help you invest in stocks. Raise to another level. Because knowing how to go is more important than knowing how to buy, and knowing how to go is an important factor in determining how much you can earn or lose. The first trick, everyone needs to learn to identify the Distribution Day. As the name implies, the shipping day is a day of huge selling pressure. On that day, it may be that large account...

FinanceLinkway

Search This Blog