Facing challenges in recent years, Alibaba (NYSE:BABA) is now starting see a rebound build. The company’s share price is starting to see some recovery, with BABA stock up on the year as the company put forward strong recent earning reports.
Analysts are also growing increasingly positive on the Chinese e-commerce giant, with the average consensus price target suggesting 33% upside could be in the cards.
Alibaba’s Q4 earnings impressed me (but maybe not the market), with revenue increasing by 7% due to excellent e-Commerce and cloud growth.
Despite economic challenges and regulatory pressures, Alibaba has demonstrated resilience, especially through its management of Tmall and Taobao. Both platforms saw a double-digit surge in Gross Merchandise Volume.
Overseas commerce revenue soared by 45%, and cloud earnings rose, driven by a significant uptick in AI sales.
That said, BABA stock has continued to trade at a low valuation. So, the question is whether this is a stock with a valuation multiple that’s permanently impaired, or a growth-at-a-reasonable-price play with big potential for long-term growth.
Let’s dive in.
Expanding in Global Market
Alibaba is now looking to expand internationally by launching Alibaba Guaranteed. This service will cater to small business in both U.S. and Europe, and was made to enhance transparency in all processes like procurement, payments, and dispute resolution.
Previously unavailable for small retail businesses because of trade complexities, the service now offers better delivery tracking and free return options, aligning with current global trends.
Experts have noted a surge in global supply chain fragmentation, as diverse businesses turn to international procurement. Chinese suppliers on Alibaba.com serve U.S., European, and global small businesses, prioritizing corporate clients in supplier registration.
Kuo Jian highlights a threefold increase in Alibaba.com buyers over five years, with growing electric vehicle demand boosting automotive parts sales.
Natalya Milchakova, a prominent analyst at Freedom Finance Global, highlights the timeliness of introducing “Alibaba Guaranteed” for European firms due to escalating return costs and inflation. Milchakova predicts that integrating artificial intelligence into this service will expand Alibaba’s European customer base.
Excellent AIDC Segment
In the partnership, Alibaba.com rolled out various initiatives to aid SMEs, providing deals and advanced sourcing tools for soccer merchandise sales. The collaboration with UEFA is expected to heighten Alibaba’s appeal among European SMEs.
Q4 2024 showed $3.8 billion revenues from the AIDC segment, showing a 45% year-over-year growth. Alibaba also prioritized AliExpress by integrating logistics through Cainiao. BABA heightened investments in key markets to boost AliExpress’ global market presence and customer experience.
Alibaba has thrived amid competition, driven by robust momentum in its international retail sector. Strong order growth and AliExpress’ Choice bolstered performance. The wholesale commerce business benefited from cross-border added services, with China’s wholesale sector expanding positively.
Robust Growth in 2024
Alibaba.com’s president, Zhang Kuo, forecasts a potential 20% growth in gross merchandise volume (GMV) to $60 billion in 2024, as per a June 6 interview. Despite slowing B2B marketplace growth, Alibaba pushes for innovation and transformation to sustain momentum.
With the Alibaba Guaranteed, Alibaba is offering fixed-price procurement with shipping included, aiming to streamline B2B cross-border trade. Zhang highlights its potential to simplify global sourcing for SMEs. With over 48 million SME buyers, Alibaba.com aims to enhance accessibility and efficiency in the marketplace.
Buy BABA Stock Now
I’m growing increasingly bullish on Alibaba at its current price point. This is a cloud and e-commerce player with AI related tailwinds the market isn’t pricing in.
Given the demographics behind the markets in which Alibaba is most dominant (China and other Asian nations), there’s a lot to like about the company’s growth prospects moving forward.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
