Shares of Chinese e-commerce and cloud giant Alibaba have gained about 12% since the beginning of 2024, but are still down more than 70% from their 2020 highs. Inventory is trading at a moderate value of $85, which It equates to less than 10 times projected FY25 earnings. By comparison, Amazon trades at about 36 times forward earnings. Alibaba also has about $50 billion in net cash, or about a quarter of its market value, bringing the non-cash value to less than 8 times. So what are the points holding back inventory and what are the possible catalysts for the recovery? Furthermore, SNOW is lagging behind. See Snowflake Stocks: Melting Expectations or Temporary Setback?
Alibaba reported better-than-expected results for the second quarter of fiscal 2025, with cash up 5% year-on-year to 236. 5 billion yuan (about $33. 7 billion) and net profit up 58% to 43. 9 billion yuan (around 6 billion dollars). ). However, China’s retail market remains weak due to a combination of customer sentiment and slowing economic expansion following the housing crisis. This affected spending, specifically discretionary items. The growing festival in the e-commerce space has also proven to be a challenge for the company. PDD, owner of step-down platforms Pinduoduo and Temu, has gained ground as Chinese customers become a little more price-conscious due to the weak economy. Revenue from Alibaba’s online marketplaces Taobao and Tmall rose just 1% year-on-year to $14. 1 billion in Q4FY24. Concerns about a combined recovery in consumption may persist, potentially exacerbated by listings. of emerging prices in the United States and the threat of an escalation in the industrial war between the United States and China when Donald Trump assumes the presidency of the United States.
Since the end of September 2024, China has taken recovery measures and very significant interest rate reductions, which could help stimulate economic expansion and public spending. Alibaba has also subtleted its pricing style and recently replaced its annual constant service fees for suppliers with software pricing of 0. 6% on the gross price of goods for transactions on Tmall and Taobao. This resolution may be just the source of revenue for its main visitor control services, following significant investments in its platforms and technology. The company’s virtual marketing tool, Quanzhantii, also deserves to spur monetization for the Taobao and Tmall marketplaces.
Alibaba, Aliexpress and Trendyol electronic commerce Aliexpress Choice program that offers loose shipments and other services. Meanwhile, the expansion of the foreign industry can simply mitigate China’s weakness. Alibaba is also adjusting its broader electronic commerce strategy to imitate competition driven by value as a pinduoduo.
While the Alibaba cloud computing business has experienced a slowdown after COVID-19 pandemic due to the lower demand for computer personnel related to remote work and education, things have improved. In the last quarter, the Company’s Cloud Intelligence Group expanded again, with sales an year -on -year increase of 7% to 29. 6 billion yuan (4. 2 billion dollars), driven by a strong expansion of the public cloud and an increase of three digits in income from products related to artificial intelligence. It is imaginable that the company’s projects obtain help from the Chinese government, in the midst of US restrictions on exports of complex semiconductor chips to China and the growing geopolitical importance of AI. In the AI field, Alibaba is emerging as an open source giant. Language models, providing developers greater flexibility to create traditional responses using their technology. This strategy can inspire developers to adopt Alibaba cloud facilities to implement these models.
Notably, Baba’s shares have gained less than the broader market in each of the past four years. Stock returns were -accounting9% in 2021, -26% in 2022, -11% in 2023 and 12% in 2024. Trefis’ high-quality portfolio, with a collection of 30 stocks, is less volatile. And it has strangely surpassed the S
We estimate the Alibaba valuation in around 108 dollars according to percentage, indicating a 27% increase compared to the market value of around $ 85 according to percentage. See our Alibaba profit research to learn more about how more likely the earnings of Alibaba will follow the trend.
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