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Investing in Alibaba: What to Consider
Alibaba, trading on the New York Stock Exchange as BABA, is the world’s largest online retailer, boasting higher sales than the likes of Walmart and Amazon. The company is constantly diversifying its product offerings, successfully expanding into other markets such as venture capitalism and IT services. Alibaba went public on September 19, 2014, opening at $92.70 per share.
Despite being a retail giant, Alibaba offers a wide range of services that continue to expand as the company matures. Some of these services include cloud computing, AI, navigation, tourism, venture capitalism, media and much more.
Who should include Alibaba in their portfolio?
- Tech investors: Anyone who is looking for tech stocks should consider Alibaba as a viable option. Alibaba has a positive track record, well established in its industries.
- Traders interested in the Chinese market: Alibaba is a great way to kick-start a trading foray into the Chinese market. The company is extremely transparent and covered extensively by media outlets. Traders can be confident that there will never be a lack of information.
- Those interested in stable trading: The company is considered by many analysts to be a sound investment. This is due primarily to the company’s growth exceeding expectations, the almost legendary status of its leader Jack Ma and a corporate culture that is perceived to be progressive and forward thinking.
- Day traders: While perhaps not providing the potential opportunity from volatility of many younger tech companies, Alibaba can still be considered a valued asset for short-term day trading.
What drives Baba stock price?
- Profitability: Like most companies, total revenue and profit can have a direct effect on the value of BABA stock. Over the last several years, Alibaba has gained a significant amount of value, making its founders and major partners extremely wealthy.
- US and China trade relations: Trade relations between China and the United States will often directly influence the stock value of larger Chinese corporations. Despite its gargantuan size, Alibaba is not immune to the China-United States relationship.
- Jack Ma: Alibaba is a one-man show in many ways. CEO Jack Ma is the heart and soul of the company. His clean and professional persona is a positive for many investors. But if that changes in the future, it could have adverse consequences on investor sentiment.
Alibaba stock: innovation and competition
Alibaba is predicted to continue its foray into a multitude of industries, as it expands its global reach. However, many expect the retail industry to spearhead the company’s operations for many years to come. Even though Alibaba enjoys unprecedented success in e-commerce and online retail, it must continue to innovate its product offering to stave off competition from the likes of Amazon and Apple. Indeed, Amazon’s stunning rise of late has caused speculation about how Alibaba can confront one of its biggest competitors.
Regardless of stiff market competition, the majority of investment experts are often keen on Alibaba, whom they see as a major industry player. And who can argue? With a sound strategy, an admirable corporate ideology and massive cash reserves, it is a safe bet to assume that Alibaba will be a major force in the foreseeable future.
HISTORY OF ALIBABA
Founded on April 4, 1999, by Jack Ma and Peng Lei, Alibaba has become one of the largest e-commerce providers in the world. The initial capital raised to start the company was a mere $20,000. The origin of the name is simple and very practical. Ma was searching for a global name that was easily recognisable and could transcend cultures.
In addition to its massive online offering, Alibaba has greatly diversified during its history, entering industries such as brick-and-mortar stores, cloud computing, and even AI development. This diversification is considered one of the main pillars of the company’s success.
Conclusion: the future is bright for Alibaba
Tech stocks are often incorrectly perceived as high-risk high-reward, extremely volatile at times, and incomprehensible to anyone without an IT background. Alibaba shatters all of these myths. Considered by some to be the General Electric of the modern era, it is a company with a solid foundation, fantastic services and a proven track record of successful business. Google, Apple and Amazon are at the top. But Alibaba is in the same league and should not be forgotten. Those who do, do so at their own peril.