Reportedly, Chinese e-commerce giant Alibaba Group Holding Limited BABA is expanding its presence in India. The company has chosen the Platina business center in the Bandra Kurla Complex area in Mumbai to set up its first office in India. In fact, it is in close proximity to archrival Amazon’s AMZN office in the same area.
Notably, Kotak Mahindra Bank, Aditya Birla Finance and IDFC Bank will partner Alibaba for banking, lending and providing transactional services.
Thus far, Alibaba has been popular with small business owners in India when it comes to sourcing industrial goods manufactured in China. Indian vendors have also taken to the platform to sell their products globally. We note that the company has invested in Paytm (a mobile payments platform) and Snapdeal (an Indian e-commerce platform) in the past through its payment wing, Ant Financials.
ALIBABA GROUP Price and Consensus
Why This Move?
India is an emerging e-commerce market. As per a joint study conducted by ASSOCHAM-Forrester, India’s spending on e-commerce is estimated to reach a whopping $120 billion in 2020 from $30 billion currently, growing at a CAGR of over 36%.
Hence, Alibaba’s decision to set up its office in the country is a move in the right direction.
However, with the presence of major e-commerce players such as Flipkart, Amazon and Snapdeal, competition is going to be stiff for Alibaba.
Stock Performance Overview
Shares of Alibaba have performed more or less in line with the broader Zacks Electronic Commerce industry on a year-to-date basis. While the industry generated a positive return of 7.3%, the stock returned 7.5%.
The moderate performance of the stock could be attributed to the solid growth in its core e-commerce business as well as growing cloud computing services. However, macro headwinds, continued investments and increasing competition remain concerns for the company.
Zacks Rank and Key Picks
At present, Alibaba carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology space are Stamps.com Inc. STMP sporting a Zacks Rank #1 (Strong Buy) and boohoo.com plc BHOOY, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Notably, the consensus estimate for Stamps.com’s current year has remained stable at $6.53 over the last 30 days.
The consensus estimate for boohoo.com’s current year has improved to 44 cents from 43 cents over the last 30 days.
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