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...

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...

Investors have begun to switch back to traditional growth stocks

On Thursday, the stock prices of Cisco, Alphabet, and IBM hit new highs. But more importantly, the previously unpopular speculative growth stocks, including stocks bought by many ARK funds, have now begun to rebound. How is this going? Investors' perspective on the market is changing. In the first quarter of this year, mainstream voices in the market believe that the economy will restart strongly, bond yields will rise, and inflation may become a problem later this year. After the end of the first quarter, these expectations were only partially fulfilled. The U.S. economy has indeed restarted strongly, but bond yields fell in the first quarter instead of rising because investors began to believe: 1) Inflation and supply chain disruption may indeed be "temporary", as the Fed insists; 2) The second and third quarters will be the highest points of stock returns and economic growth. Alec Young, a chief investment officer of Tactical Alpha, said: “...

7 great investors' operating strategies to deal with the stock!

No one can be 100% sure about the outlook for the US stock market. Instead of entangled in whether the bull market in US stocks will end, it is better to think about what lessons can be learned from this plunge. Historically, due to the end of the summer market in September, U.S. stocks did not perform well. The plunge on Thursday sounded like a wake-up call for investors earlier. Be careful next week. Although Nasdaq is tolerant of faults The rate is high, but the up-and-down shock pattern has not changed, and there needs to be an established process. Investing in stocks should take a long-term view, have a long-term investment mentality, don't care too much about the rise and fall of one or two days, and don't feel unhappy because of the turmoil of the stock market, which affects the judgment of stock buying and selling. Today, let's take a look at how those familiar investment masters are invincible. The reason why masters become masters is that they have become masters ...

Will China's economy recover as the epidemic is under control?

During the Chinese Spring Festival, novel coronavirus broke out in Wuhan, and the Chinese stock market was hit hard. Subsequently, the Chinese government quickly took strict measures to block Wuhan, a city with a population of tens of thousands of people, to prevent the further spread of the epidemic, and to take corresponding epidemic prevention measures in other cities. When the worst of the epidemic had already occurred, the Chinese stock market quickly rebounded. As the number of infections continues to decline, China's Shanghai Composite Index is expected to rise further. Sars Period Looking back on similar events in the past, the SARS epidemic in 2003, the stock market also made a short-term decline, and then the SARS epidemic was brought under control, the stock market immediately went up for a long time. According to past historical data, the impact of the novel coronavirus epidemic on the stock market may be short-lived. China Fund Capital Flow Howeve...

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...

TSMC VS Nvidia, AMD, Intel. How to choose semiconductor stocks?

The general pattern of the semiconductor industry, the overall trend and target price of TSMC in 2021, how the Nvidia(NVDA), AMD, and Intel(INTC) semiconductor stocks are laid out, what is the decisive factors, and whether there is a predictable time point, we conducted a more systematic discussion. The big picture of the semiconductor industry The semiconductor industry is cyclical. Since the second half of 2019, global semiconductors have entered a new round of the business cycle. This is very important. Only when you understand this reason can you hold stocks with peace of mind. The following analysis is based on the time dimension. In the short term, looking at one to three months now, with the outbreak of the epidemic again, the production capacity of 8-inch wafers are in short supply, the semiconductor industry chain is out of stock, wafer foundry, packaging, and testing links have seen price increases, and production capacity is in short supply. High economic situation, In ...

Bitcoin will eventually lose its king status! Replaced by Ethereum

Considering many factors such as real use, user base, technological iteration speed, etc., Ethereum is likely to replace Bitcoin as the mainstream cryptocurrency. In terms of market trends, the key difference between the current cryptocurrency market and the 2017-2018 bull market is the participation of institutional investors. However, with the recent slowdown in the participation of institutional investors, the inflow of cryptocurrency ETFs has decreased, alternative currencies have emerged one after another, and the market has once again been dominated by retail investors. This shift from institutions to retail investors is increasing the possibility of a market crash. The current high volatility in the market will continue until cryptocurrencies have potential real economic uses independent of prices. Etherfang has huge potential The Ethereum system supports smart contracts and provides developers with a way to create new applications. ...

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...

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...

FinanceLinkway

Search This Blog