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Why Alibaba is among the top e-commerce stocks

Alibaba Group is a giant of the e-commerce industry. It is the largest mobile and online commerce company as measured by gross merchandise value. It had a staggering GMV of $846 billion as of March 2019. Alibaba operates some of the best-known e-commerce platforms of China. These include Tmall, AliExpress, Alibaba, Taobao, and 1668. As of March 2019, Taobao and Tmall together produced a GMV of $807 billion, more than the total GMV of eBay and Amazon combined. Alibaba also bought a controlling stake in Lazada, an e-commerce company focused on south-east Asia. So, in terms of scale and size, Alibaba is among the largest e-commerce companies in the world.

Businesses other than e-commerce

Being such a large player in the Chinese and south-east Asian markets through its various e-commerce platforms, Alibaba will eventually reach a saturation point. It, therefore, needs to find new avenues of growth. This could come by either entering newer geographies or building businesses in areas other than e-commerce. Alibaba has been working on the latter, with its cloud computing segment as well as the digital and entertainment segment. Alibaba sees its cloud computing business to become its main business in the future. Alibaba CEO Daniel Zhang has publicly stated that cloud computing technology is a growth engine and a once-in-a-generation opportunity. In the June quarter, cloud revenues grew by 58% and are the company’s fastest-growing segment. Alibaba plans to invest 200 billion yuan in its cloud business, positioning it as one of the cloud computing stocks to buy.

Besides cloud, Alibaba also owns ticket platform Damai, music service AliMusic, and video platform Youku Tudou. These are all market leaders in their own segments. Alibaba is, therefore, counted among the best entertainment stocks as well as more people consume content online.

How do the best e-commerce stocks 2020 compare?

Alibaba’s stock is up 31% year-to-date. Tencent is up 33% (Hong Kong-listed), while Amazon is up 64% during the same period. eBay, meanwhile, is up 42% year-to-date. So, on a pure price performance basis, Alibaba currently lags its e-commerce peers. However, in terms of its size, scale, and industry position, Alibaba is among the most dominant e-commerce companies in the world.


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