Alibaba Group: Open Sesame!
Chinese e-commerce giant, Alibaba, catching up to U.S Giants
Investors are looking towards China now as Alibaba looks to play alongside American giants such as Facebook and Amazon, following strong Q1 numbers which blew away expectations.
On Thursday, Alibaba Group, the Chinese e-commerce giant, released that its profit for the first quarter almost doubled, while its revenue rose more than half. They reported 460 million active monthly users, and 529 million monthly mobile users.
Those weren't the only big numbers though, Alibaba Group stock price, increased more than 80% so far this year. Now Alibaba as well as Chinese rival, Tencent Holdings, have valuations around $400 billion. Comparing it to U.S. e-commerce and web based companies, China is catching up.
Amazon.com has a valuation of about $470 billion, and Facebook about $490 billion. Alibaba and Tencent have become the go to for Chinese middle class entertainment, shopping and spending. Tencent offers extremely popular video games and social media services in China, with its valuation also jumping higher.
When you're competing with the giants though, there's high expectations. It's all about number, numbers, numbers. Alibaba said its fiscal first-quarter profit rose 94% in cloud computing services to $2.2 billion. Alongside a strong increase in e-commerce businesses which rose 56%. But will this stand?
Strong competition is likely to occur, and the company relies heavily on the Chinese economy booming. Expanding overseas would be difficult with companies such as Amazon.com, and in order to grow you need new customers and vendors.
Still there is a lot of untapped Asian consumers with China alone having a population of over one billion (estimated 700 million with disposable income.) But Alibaba is looking for much more than e-commerce, branching into an Amazon.com-like expansion, investing in cloud computing, high-profile newspapers, its own entertainment content, and new commerce technology for retail stores.
Alibaba Group CEO Jack Ma is a genuine visionary and businessman looking to shape the way Chinese conduct business, communicate, and shop. With these recent blowout numbers, I can only expect more good reports from the Alibaba Group as consumption and services look to grow in China.
Follow the Author's Instagram & Twitter: @rimbuknyc