Alibaba BABA Stock Analysis:
Online trading and electronic commerce have been increasingly dominating the global trading the last years. Internet-based retail increases in an exponential rhythm, while the use of internet becomes more and more significant in people’s lives. The devastating majority of us, if not all of us, have ordered online either daily basic need products such as food, or whatever comes to mind (video games, clothes, cell phones, aquariums!). Ordering online makes people’s lives much easier.
Today’s world and the anxiety that drives it pressures us and limits our free time. Least to say that many of us feel tired or bored after work/school/college/training, and don’t feel like getting out of our warm house to go shopping. For all of the reasons mentioned above, there is a demand created here. And, wherever demand exists, supply always comes to match. This is where Alibaba found the opportunity to rise and offered its electronic commerce globally, beginning to offer its services in 1999. Since its IPO, Alibaba BABA Stock has gained almost 100% of its price, trading now to 186.64. The overwhelmingly increasing demand for e-commerce signals positive waves for the future of this company.
So now let’s use IDDA for Alibaba BABA stock to see if it can fit in your investment portfolio. Let’s start with the first IDDA point, the fundamentals.
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1- Fundamental Points: Alibaba BABA Stock
Who are they?
Alibaba.com is a leading platform for global wholesale trade, providing either consumer-to-consumer, business-to-consumer or business-to-business sales services via web portals. Their businesses are comprised of core commerce, cloud computing, digital media, entertainment, and innovation initiatives. At closing time on the date of its IPO in 2014, Alibaba’s market value was $231 billion, while as of November 2017 its market value stood at $486.27 billion (110% increase).
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Alibaba delivers hundreds of millions of products in over 40 major different categories, including machinery, apparel, and consumer electronics. However, Alibaba’s services don’t stop on electronic commerce. Alibaba Group participates in the logistics and local services sectors and has a profit-sharing interest in Ant Financial Services, the financial services group that operates mainly through Alipay, the leading third-party online payment platform in China. It has been the world’s largest and most valuable retailer as of 2016, surpassing (profit-wise) Walmart, Amazon, and eBay.
The company’s name came from the character Ali Baba from the Arabian literature One Thousand and One Nights because of its universal appeal. It was founded in 1999 by Jack Ma (in collaboration with 17 more people) and its IPO took place on September 19th, 2014. Jack Ma serves as an Executive Chairman as of today, with Mr. Zhang serving as CEO, and Mrs. Maggie Wu serving as Chief Financial Officer.
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Capital points
| Alibaba BABA Stock | |
| Price as of 11/07 | $ 188.51 |
| 52 Wk Range | $ 86.01 – $ 191.22 |
| Shares Outstanding | 1,117,400,000 |
| Market Cap | $ 480.73B |
| Beta | 2.59 |
| P/E (TTM) | 63.55 |
| P/B (MRQ) | 10.65 |
| Gross Profit | $ 14,334,000 |
| WACC | Low: 12% High: 13.5% |
| Diluted EPS | 2.955 |
| Total Debt/Equity (MRQ) | 27.16 |
Alibaba BABA Stock possesses a quite high beta at 2.59. This means that if things go well in your position your profits can be taken-off. You will not want to own the stock however if your position is the opposite of what it should have been.
Alibaba has become the first Asian company to break the US$400 billion value mark. Generating gross profits of $14.3B as of 2017 and $10.32B as of 2016 clearly indicates its enormous success in the global markets. Alibaba’s shares have been up 76.6% this year and we can say that its WACC ranges between normal levels.
This brings us to the second point of the IDDA, technical analysis.
2- Technical Points: Alibaba BABA Stock Analysis
Since September of 2015, we can observe a general upward trend of Alibaba BABA Stock. The stock has been trading above the Ichimoku cloud since the most recent uptrend started back in December 2016. Since then all five moving averages of the Ichimoku Kinko Hyo‘s daily setup have been moving upward. Using the Fibonacci retracement during this uptrend, we realize that the 23% level at around $166 has acted as a key support level in that past four months.
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3- Market Sentiment
Alibaba’s cloud division generated revenues increased by almost 100% compared to last year’s and its cloud business is still growing. We can see from the monthly charts that there is a very strong bullish direction since 2015 for Alibaba BABA Stock. Probably this has happened due to the expansion of online product delivering demand by clients and due to the well-known synergies that derive for the suppliers that cooperate with the China’s most powerful company at this point of time.
Looking at the 4-hour chart, we realize that the market has been consolidating since Alibaba BABA stock price reached the all-time high level of 191. The Ichimoku cloud has turned flat. And the market was pretty much indecisive during the final sessions on Friday. With this, we could expect at least another wave of pullback towards the pivot level of 180.56. This level falls on the lower band of the flattening Ichimoku cloud.
Online trading comprises the future of retail. Internet-based retail provides suppliers with lower costs and increased speed of transactions, offering higher product quality. On the other hand, customers, namely people all over the globe, keep increasing the demand of online delivery of products, due to a variety of reasons, including the sense of luxury when receiving your product at the front of your door provides. It seems that companies operating in electronic commerce expect high growth and valuable services provision.
Alibaba BABA Stock Analysis – Investing Strategy
As the 4th point of the IDDA, you must calculate your risk tolerance before deciding on the investment strategy that is suitable for your portfolio. Join us for a free MasterClass to learn more.
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Happy Hunting!
Anthony Pistikos
#1 Best Selling Author. Helping you accelerate your retirement with Triple Compounding™ Former engineer on a mission to help 1 million households take control of their finances. Founder & CEO of Invest Diva.
