What to Expect from Alibaba Stock (BABA Stock) in 2017
Although 2017 is barely two weeks old, Alibaba Group Holding Ltd’s (NYSE:BABA) aggressive maneuvering could bring spectacular gains to Alibaba stock. In fact, the BABA stock price grew three percent on Tuesday as investors turned bullish on the e-commerce giant.
This was unexpected, to say the least.
With the swearing-in of Donald Trump as president of the United States drawing nearer, most analysts believed that BABA stock was jeopardy. Trump’s anti-China rhetoric made Alibaba investors nervous. They worried that Trump could sabotage the rise of Alibaba stock through a trade war.
However, Alibaba CEO Jack Ma met with Trump this week. Both of them emerged from the meeting looking pretty happy, because they found a win-win scenario.
Here’s what they agreed on: Alibaba would lure one million U.S. small businesses onto its platform by helping them sell to Chinese consumers. This would eventually translate to about one million new jobs in the United States. (Source: “Alibaba’s Ma meets Trump, promises to bring one million jobs to U.S.,” Reuters, January 10, 2017.)
By hammering out this agreement, Ma has calmed fears that BABA stock would suffer under the Trump administration. But, more to the point, he has fast-tracked Alibaba’s plan to attract U.S. vendors. Getting those small businesses to sell to Chinese consumers was always a part of the company’s long-term strategy. So, in reality, Ma solved two headaches with one meeting.
Having a healthy relationship with Trump could pay off in other ways too. For instance, Alibaba is under investigation by the U.S. Securities and Exchange Commission (SEC), and the Office of the United States Trade Representative (USTR) added Alibaba to an infamous list of markets that are rife with counterfeit goods.
These are political problems more than anything else. Trump will soon be appointing individuals to oversee Alibaba, so it doesn’t hurt to have him as an ally. If nothing else, this meeting between Ma and Trump could make Alibaba a lower priority for regulators, thus clearing the way for BABA stock to recoup its earlier losses.
In fact, the reversal may have already begun, considering that Alibaba stock rose three percent the day after the meeting. It seems that analysts have renewed faith in the company’s international push, which is good for BABA stock in the medium term.
Such strong momentum early in the year is a positive sign for Alibaba stock investors. It could mean that BABA stock will continue to rack up more gains in the months to come, but only time will tell.