Alibaba (BABA) is one of my favorite stocks. Its great leadership and win-win business model position it for long term strong growth.
I believe in simple theory. A stock investment is a investment for the future. How to recognize what future holds in a company is a key element in deciding if it will become part of investment portfolio. The path it lays out, the culture it instills, the belief it holds are the signs of the future. For these reasons, Alibaba is one of my favorite stock investments.
What is Alibaba (BABA)
Alibaba is short for Alibaba Group Holding Limited. It is a Chinese multinational conglomerate specializing in e-commerce, retail, Internet and technology. Founded 4 April 1999, Alibaba hosts the largest B2B (Alibaba.com), C2C (Taobao), and B2C (Tmall) marketplaces in the world. Its online sales and profits surpassed all US retailers (including Walmart, Amazon and eBay) combined. It has been expanding into the media industry. (Definition source: wikipedia).
Alibaba holds the combination of highest ranked positions in several key areas and industries at once that few can compete. It is the world's largest retailer and e-commerce company, one of the largest Internet and AI companies, one of the biggest venture capital firms, and one of the biggest investment corporations in the world.
On Nov 11th 2018, Chinese single’s day, Alibaba online sales reached $30.8 Billions in first 24 hours. It is the tenth year of single’s day sales and below chart shows you how strong the growth has been.
To help you understand what Alibaba’s one day sales mean in a relative term, it is around 10 times of Amazon’s Prime Day sale, 2.5 times of Black Friday and Cyber Monday sales combined.
Alibaba IPO (Initial Public Offering) on September 19th 2014 at $25 billion, - the world’s highest in history.
However, believe it or not, things that attract me the most about Alibaba is not around its financial accomplishments, rather there are fundamental cultures and innovative business models are reasons for me to own it as my investment. (There I said it, I do own Alibaba)
Unbeatable leadership: Alibaba has the best founder and CEO, Jack Ma
Jack Ma was born in China. His understanding of business, willingness to be innovative, confidence in business development and most importantly responsibilities he is taking for poverty, society are admirable and rare find.
One of my favorite quotes from Jack Ma is “I believe when you have $1 million, that’s your money – when you have $20 million, you start to have a problem. When you have $1 billion, that’s not your money, that’s the trust society gave you. They believe you can manage the money better than the government and others.”
With this mentality, you know he will lead the company to a bigger and better path. He believes that he owe society a responsibility. He believes that to grow a business, you also need to take part in others’s development. “My job is to help more people have jobs.”
On his 54th birthday, Jack Ma wrote to his employees, customers and shareholders that he would be stepping down on September 10, 2019, the company’s 20th anniversary. “I still have lots of dreams to pursue… I want to return to education, which excites me with so much blessing because this is what I love to do.”
Speaking of his devotion to education, Jack Ma has always held education dear to his heart. As a former teacher, he recently expressed his thoughts on Artificial Intelligence competing with human jobs. “If we do not change the way we teach, 30 years from now we’ll be in trouble. The things we teach our children are things from the past 200 years - it’s knowledge-based. And we cannot teach our kids to compete with machines, they are smarter.”
“I think we should teach our kids sports, music, painting - the arts - to make sure that they are different. Everything we teach should make them different from machines.”
I could not agree more and am truly impressed by Jack Ma’s dedication to society and education industry.
Alibaba (BABA) is a high efficiency company.
People tend to call Alibaba as “China’s Amazon”. It could not be more wrong.
Alibaba acts as a middle person between buyers and sellers to facilitate the sales. The largest site, Taobao, operates as a fee-free marketplace where neither sellers nor buyers are assessed a fee for completing transactions., instead, it became a highest ranked search engine with advertisement revenues.
Its profit margin return is 15X of Amazon due to its strong technology infrastructure. Jack Ma said that if BABA did not have the efficiency it has today and applies Amazon model, BABA will need 1 Million employees, which is impossible to manage. The application of its platform is built on the self-developed architecture supported by a distributed system. This scale-out architecture ensures e-commerce system to be flexibly add machines to cope with the traffic flow pressures.
Here is a snapshot between two companies and data speak for themselves.
Alibaba has strong advantage of massive user base.
More than 600 million mobile users in China alone provide almost anything possible to sell in market place. Additionally, Alibaba has expanded its merchant base to other Asia Pacific region countries. This provides tremendous opportunities in Cloud, Logistics, Digital and newly Gaming segments.
Alibaba grows with billions of people together. The business owners on Alibaba marketplace have great control over how they want to manage and work for their business models. Alibaba provides a platform and tools to help business owners succeed in reaching their markets. It still leaves much room for each business to develop its own strategy and differentiation. They grow with businesses, instead of taking over businesses. This distinguishes Alibaba from any other marketplace models and allow it to focus on market efficiency as oppose to operation.
Alibaba understands the best way to grow its business is to help its small business owners grow their business. My favorite story is when Jack Ma holds annual event to invite 10,000 remote area leaders and provides free computer with free training as to how to sell on its consumer to consumer portal taobao. Taobao features more than 1 billion products. It has helped under poverty people to find ways of bringing their unique products to the entire country by one click. The opportunities it brings to people are tremendous, so is the profit.
BABA is a diversified investment by itself
Its business touch many sectors, industries from cloud, digital, gaming, health care to entertainment industry. Holding Alibaba is like holding many pioneer companies at once. If you think diversification is one of your investment requirement, Alibaba fits into your mix.
Great leadership, massive market base, leading efficiency with focus on future technology and a diversified business model are the reasons I choose Alibaba as my investment.
Tell me your thoughts?
Simple Wealth For Women is a blogging website focusing on financial discussions. I help women to crush debt, learn how to invest and make more money. I show you simple approach and provide you with specific ideas to help you get to financial freedom and build an amazing life.
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