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

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...

Bear market coming, gold(GLD) assets become essential

The economic data of the global economic powers have been deteriorating, entering the bear market stage of the economy, and people have become more cautious when choosing asset investment. We should choose investment products with a low correlation coefficient with economic performance and investment products suitable for the current economic cycle. Investors should pay more attention to foreign exchange and commodity markets so that they can add value to your assets. Among many assets, anti-inflation commodities such as gold have become essential assets. Take gold as an example. For many years, gold has been regarded as an anti-inflation commodity by international capital markets and has been regarded as an important asset hedging tool by investors. There is also a saying, "The world bought gold during turbulent times." From basic political theory, we know that gold is not currency, and the currency is naturally gold and silver. Although gold has withdrawn from ...

Why has international oil(USO) prices plummeted?

As OPEC and Russia failed in negotiations and could not reach an agreement to reduce production, Saudi Arabia issued a comprehensive production increase announcement. Russia followed Saudi Arabia to increase production. Due to the sharp increase in oil supply, international oil prices plummeted, and US stocks were affected by the spread of the epidemic, and international oil prices The plunge, the U.S. stock market plummeted, triggering multiple fuses. S&P500 Index Oil is a commodity whose price is affected by supply and demand. When oil production increases, supply increases, prices fall, and at the same time affected by the epidemic, demand decreases, and prices also fall. Oil supply increases and demand decreases, which is the main cause of the plunge in international oil prices. In terms of oil supply, since the United States developed shale oil, US oil production has become the world's largest. The production cost of shale oil is more than US $ 40, which is the ...

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...

How to judge the diffusive horn pattern ?

As an investment trader, you must understand the use of chart technology analysis to determine the position of market transactions. Now let's talk about a common pattern in chart technical analysis, which is the diffuse speaker pattern. Diffusion horn patterns are different from trend patterns and horizontal patterns. Diffusion horn patterns are more difficult to judge than trend patterns and horizontal patterns, and often cause losses to investment traders. So, how do investment traders judge the spreading horn pattern and make favorable investment transactions? S&P500 Index The price trend of the diffusive horn pattern. When the price rises over some time, then the price falls, and falls below the recent low, then rises, and rises through the last high. It keeps expanding in two directions. If we connect the high point and the low point with straight lines, respectively, we can show a horn shape, so it is called a diffuse horn shape. Because of this, some i...

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...

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 ...

10 stocks tell you why U.S. stocks plunged!

On February 24, 2020, the U.S. stock market plummeted by 1,000 points. Since the outbreak of the new coronavirus epidemic, although market funds have already begun to flow into safe-haven assets such as gold and bond markets, the epidemic does not seem to have an impact on the stock market trend. As the new coronavirus epidemic spread further, and companies began to publish performance reports, investors began to worry that the epidemic would affect the company's next quarter's profit growth and made predictions for the company's next quarter's performance. Analysts lowered the companies The profit forecast for the next quarter, and the Fed is expected to cut interest rates in March, the Fed's rate cut indicates that the economy may further decline. S & P 500 Index Fed watch As an investor, you need to know how to value a company using PEG indicators. Generally speaking, the valuation using the PEG indicator is more accurate, but it is only used t...

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...

The relationship between Dow theory and the stock market!

Many technical analyses, such as morphological analysis and wave theory, use the Dow theory as the basis for the evolution of original technical analysis. Let's talk about the relationship between the Dow theory and today's stock market. Starting from the three most widely known theorems, theorems, market behavior is inclusive and digestive, market behavior follows the trend, and history will repeat itself. Among these three theorems, there are many Charles investment ideas, which can also be said to be the backbone of technical analysis. Charles' first theorem hoped that the market was originally a gathering place for hundreds of news. For example, Jun A believes that a country's civil war and unstable economy caused it to sell the shares of local companies; Jun B learned that the local companies will still have considerable profitability next year, so he bought the shares of local companies; Jun received a third different message and made an investment decision and...

FinanceLinkway

Search This Blog