Singles’ Day Could Be Big Boost to BABA Stock
Alibaba Group Holding Limited (NYSE:BABA) just had its greatest shopping day in history. On November 11, 2015, known as Singles’ Day, a holiday created by the company, Alibaba’s gross merchandise volume (GMC) totaled a whopping $14.3 billion, a 60% increase compared to a year ago. Despite concerns surrounding China’s stock market crash earlier in the year, BABA stock has climbed quite a bit in the past month. Moreover, growth in the company’s market has been so consistent that its stock price might start to follow the same pattern. (Source: “Alibaba Group Generated USD 14.3 Billion of GMV on 2015 11.11 Global Shopping Festival,” Alibaba Group, November 12, 2015.)
Singles’ Day is now the biggest online shopping festival for Chinese consumers. However, this festival was not around until six years ago, when Alibaba launched the first Singles’ Day shopping event in 2009, with only 27 merchants working to raise awareness of online shopping in China. Since then, the online shopping festival has grown to astronomical levels, with “Alipay” processing a total of 710 million transactions at this year’s event.
So, we know the company behind BABA stock grew its business substantially during its recent shopping festival, but where did the growth come from?
Alibaba’s Greatest Shopping Day in History
According to Alibaba, the company focused on its globalization strategy during this year’s Singles’ Day. This comes as no surprise, because Chinese consumers have always been fond of many global brands. For this year’s event, Alibaba’s platforms facilitated transactions between buyers and sellers from 232 countries, with 33% of total buyers making their purchases from international brands or merchants. In total, there were more than 16,000 international brands with completed transactions. Chinese customers seemed to have a particular liking for products from the U.S., Japan, South Korea, Germany, and Australia.
Making purchases on your smartphone app seems a lot more convenient than doing so on your desktop browser, at least that’s how Alibaba’s customers felt. In the past three Singles’ Day shopping events, the company’s mobile GMV grew from 21% of total GMV in 2013 to a whopping 68.7% in 2015. Looking at the dollar value, total mobile GMV for this year’s event came in at approximately $9.8 billion, up 158% compared to last year.
So far, Alibaba has demonstrated the success in its online retail marketplace business, butt investors should also take note of the company’s expansion into the video streaming business. For instance, Alibaba launched its Netflix-style on-demand video streaming service “Tmall Box Office” (TBO) in China this September. On November 6, Alibaba announced that it agreed to acquire a leading Chinese online video streaming company, Youku Tudou Inc. (NYSE:YOKU), in an all-cash transaction. This will give Alibaba a significant presence in China’s online video streaming industry.
In case you haven’t noticed, Alibaba’s top-line numbers have been growing at a quite phenomenal pace. Moreover, growth has been consistent; each quarter, Alibaba posts double-digit year-over-year growth in revenue and GMV.
The market for BABA stock, on the other hand, wasn’t so hot for the most part of this year. Investors were worried when China’s stock market crashed a few months ago. However, after realizing that the company’s business wasn’t affected that much by the stock market crash, investors’ interest in the company started to grow again. From September 28 to today, BABA’s stock price has climbed 36.8%.
The Bottom Line on BABA Stock
Despite the recent rally, BABA stock is still down more than 24% year-to-date. With such a phenomenal performance and great opportunities ahead, the company has some serious upside potential.