Alibaba Stock Price Prediction (BABA)
The Chinese online giant has a fruitful future, but is it a good stock to invest in?
Alibaba is a giant in the Chinese internet market, although it has not quite taken off on an international scale.
In short, Alibaba was founded in 1999 by Jack Ma, a person who claims to have not coding knowledge or any knowledge of computers at all for that matter. So Alibaba is an unlikely internet success story to say the least.
Not too long ago, the Chinese startup now boasts over 22,000 employees.. starting from only 18. November 11, 2016, market a huge day for Alibaba when it generated over $18 billion in revenue in a single day.
Alibaba is a platform that connects wholesalers based in China, with around 200 global businesses. Their business model allows a company in the UK to find a manufacturer abroad and have products made.
Alibaba Stock Price History
Alibaba Stock IPO was a sight to behold and a day to remember as the largest stock market flotation. Investor demand for Alibaba stock was off the charts that the shares did not begin trading until two hours after the bell. This is because Alibaba’s banks could not find a seller.
Shares got sold to investors for $68 a share and reached highs of $99 in the first few minutes of trading. The trading day ended at $93.89, an increase of 38%.
Alibaba Stock Price Prediction
Alibaba is a vastly profitable business growing at a healthy rate. The market cap of $437 billion mirrors fast growth and long-term potential for investors. The 1-year return on Alibaba Stock (BABA) is at 7.28%. Alibaba stock is currently down 18% from its peak due to trade war speculation. Due to a slight fall in stock price, this may be an ideal time to invest in BABA stock as it’s price is expected to rise once trade war talk dies down.
The Alibaba stock price prediction for the next 12 months is around $170.
Chinese investors are weary about trade wars with the U.S so Chinese stocks are under selling pressure currently. The impact on China’s economy would be noticeable if a trade war with the U.S is initiated, so Chinese stocks are currently shaky due to the possible currency valuation drop. Alibaba stock price is down by almost 18% from its peak of 2017, which can be attributes to trade war talks.
On the brighter side, Alibaba is doing well financially thanks to strong performances year round. Long-term, Alibaba has some promising prospects and valuation numbers are also enticing for such a profitable business. For investors with persistence who don’t mind the uncertainty of it, Alibaba seems to be a good buying choice.
Alibaba stock forecast can be predicted by looking at their March performance results. The total revenue of Q1 2018 was at $9.87 billion, an increase of 61% from last year. Alibaba ended Q1 with 552 million users on its platform. This is 37 million more users than from December 2017. Alibaba’s cloud computing business also performed well, with revenue increasing by 10% from the year previous.
We normally see growth rate in company’s slow down as they become bigger, which is just not the case for Alibaba. Not only is their ‘China commerce retail’ performing well, their ‘International commerce wholesale’ is also performing.
To ensure long-term growth, Alibaba is investing ferociously in new initiatives across different sectors. These investments are taking from Baba’s bottom line, although in the long-term the profits will be greater, as these investments begin to make a return.
Emerging markets in China will help grow online commerce, online entertainment and digital payments in the future. China’s middle class is growing and this is pushing future economic growth even further. Creating the ideal economic environment for an online retailer to succeed in.
Unlike the U.S, internet penetration is still small in China at 55%, which is also expected to grow. With a population of 1.379 billion people, China has three times as many smartphone users than America. With digital payments being eleven times more popular in China than the U.S. Before Alibaba looks to expand into global waters it may be focusing on gaining more popularity in the market that it is based in (Chinese).
Alibaba has huge brand recognition and has successfully scaled itself in a competitive market. This should ensure longevity for the stock and keep investors happy as its share price grows. The next few months will be telling for Alibaba’s stock price as trade wars come to a head with the U.S.
Is It A Good Time To Invest In Alibaba?
Alibaba has a support area near the $165 region per share. Since August 2017, this support area has worked. As the stock nears this region again, it seems to be a good time for investors to add Alibaba (BABA) to their portfolio.
Competitive pressures from companies such as Tencent and Pinduoduo (NASDAQ:PDD) so it is not going to be an easy ride for Alibaba. It is also difficult to predict what gains Jack Ma and Alibaba will make on their new ventures.
Chinese stock always carries risk that is not normally seen in other stock. The Chinese economy is subject to unpredictable cycles due to political matters – making most Chinese stock higher risk than some investors are happy with.
When weighing up risk and reward for the Alibaba stock, things look to be in the green. If you can live with owning a stock with short-term volatility in hopes for great upside gains then this may be the stock for you.
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