One would think a US$14.3-billion blowout would do wonders to boost a company’s stocks. But for Alibaba it has done little, if anything, to turn around a stock price that has fallen by 24 per cent in 2015.
The NYSE-listed company was full of unbelievable statistics, like reportedly facilitating US$5 billion worth of transactions in 90 minutes or that nearly 70 per cent of transactions were processed via Alipay. But the gains were not seen on Wall Street as the downward trajectory of 2015 continued for China’s most famous startup.
Also, the sharpest dip this week actually occurred during Single’s Day.
The peak of the week happened the morning of Single’s Day, jumping to US$82.28 per share. However, as the e-commerce giant was releasing press releases full of astounding data, the stock dropped — finishing the day at US$78.83, a 4 per cent fall.
From the Monday start of US$81.49 the stock has fallen to US$78.76 as of publishing, a 3.4 per cent fall.
Daily, weekly and even monthly stock trends are usually not worth any fuss — but it is interesting to see that the biggest shopping day in Alibaba’s history did absolutely nothing to reverse the downward trend.
By comparison, Alibaba’s rival JD.com, listed on NASDAQ, saw a 130 per cent boost in traffic year-on-year from Single’s Day 2014. Those sales translated into a 6.5 per cent stock bump.
Furthermore, while the price of JD.com stock is much lower than Alibaba’s (US$28.78 per share as of this post), it has nice gains over the course of the year, up 19.5 per cent — albeit, on June 12, the stock was worth US$37.95, which would have been a 58 per cent 2015 gain for investors who sold.
If one tidbit can encapsulate current investor sentiment, it is that the company’s the all-time stock high (US$115.10) came three days after last year’s Singles Day. Since that date (year-on-year from Saturday), stock has fallen 31.5 per cent.
Reasons for optimism
But, despite 2015 being a challenging year for China’s e-commerce giant, in late October, New York City-based equity investment firm Cantor Fitzgerald released a relatively positive analysis on the company. In the release, Piyush Mubayi, Wall Street Analyst at Goldman Sachs and a tech specialist, said,
“We remain bullish on the outlook for Alibaba. We believe anticipated softness in earnings has been priced in following the three months underperformance in absolute terms of the China Internet sector…we expect Alibaba to remain the leading e-commerce company by transaction value. Its leadership position enables it to benefit from industry growth and economies of scale.”
According to TipRanks, Mubayi recommends investors to buy.
Also, companies are following Alibaba’s lead.
Even companies that are not e-commerce businesses, like Xiaomi, got on board with flash sales and super deals.
Alibaba has had a rough 2015, and while this week’s sales numbers remind everyone why the global business community was so excited ahead of last year’s IPO, the company is not out of the water yet.
When asked by Bloomberg yesterday about the love/hate relationship investors have with Alibaba, Executive Chairman Jack Ma said: “Well, they love me or hate me, but we love them. But I think here we cannot take care of the stock price in our way. We have to take care of the results, take care of the customers, take care of the performance. This is what we care about.”
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