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Jack Ma wants Alibaba (BABA - Free Report) to be a really big deal. You’ve got to appreciate his bravado. He expects Alibaba to be the 5thlargest global economy, after Japan, by 2020. He wants the total sales for Alibaba to top $1 trillion by that year. To do that, he’s got to fix some problems.
Among those problems is the bevvy of counterfeit merchandise being sold. Multiple companies have launched lawsuits against the Chinese ecommerce group, alleging that Alibaba encourages and profits from the sale of knock-off items on its platforms.
In recent comments, Mr. Ma doesn’t exactly sound like he’s helping the problem. Ma said “We have to protect IP, we have to do everything to stop the fake products but original equipment manufacturers are making better products at a better price. The problem is that fake products today are of better quality and better price than the real names. They are exactly the same factories, exactly the same raw materials but they do not use the names.”
Maybe something is getting lost in translation here. If a factory makes Nike (NKE - Free Report) shoes using Nike’s intellectual property to figure out exactly how to manufacture the shoes and which products to use, then they shouldn’t be using the same IP, the same manufacturing process and the same materials to make similar products using a different name. Taking off the swoosh and charging half price for your Psyche’s does not protect IP. What are thooooooose?
He’s getting cocky over there too. Chinese regulators have investigated Alibaba’s practices in the past but have never found violations egregious enough to warrant shutting them down. Taking a swing at a couple competitors, Ma said “You can’t stop Alibaba for two hours otherwise it’s going to be a disaster for China. You can stop Tencent for two days, you can stop Baidu (BIDU - Free Report) for two weeks and everything will still be okay.” Shots fired.
Even with projected 48% revenue growth for 2017, analysts really aren’t buying the BABA story yet. The stock has a Zacks Rank #5 (Strong Sell) to go along with a Value Score of D, and Growth and Momentum Scores of F. The Internet Commerce industry also ranks in the Bottom 17% of our Zacks Industry Rank. Four analysts covering the stock have dropped their estimates, changing our Zacks Consensus Estimates from $2.44 to $2.03 for the current year while next year’s number has gone from $3.15 to $2.47.
Every time you share this video, somebody buys a bootleg Coach purse for their girlfriend off Alibaba but she’s never seen a real one so you’re golden. Click Follow the Author right around here. Subscribe to the YouTube channel, Twitter @bartosiastics and come back here for all the Trending Stocks with Zacks.com, I’m Dave Bartosiak.
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Knock Offs Helping Alibaba to a Trillion Sales
Jack Ma wants Alibaba (BABA - Free Report) to be a really big deal. You’ve got to appreciate his bravado. He expects Alibaba to be the 5thlargest global economy, after Japan, by 2020. He wants the total sales for Alibaba to top $1 trillion by that year. To do that, he’s got to fix some problems.
Among those problems is the bevvy of counterfeit merchandise being sold. Multiple companies have launched lawsuits against the Chinese ecommerce group, alleging that Alibaba encourages and profits from the sale of knock-off items on its platforms.
In recent comments, Mr. Ma doesn’t exactly sound like he’s helping the problem. Ma said “We have to protect IP, we have to do everything to stop the fake products but original equipment manufacturers are making better products at a better price. The problem is that fake products today are of better quality and better price than the real names. They are exactly the same factories, exactly the same raw materials but they do not use the names.”
Maybe something is getting lost in translation here. If a factory makes Nike (NKE - Free Report) shoes using Nike’s intellectual property to figure out exactly how to manufacture the shoes and which products to use, then they shouldn’t be using the same IP, the same manufacturing process and the same materials to make similar products using a different name. Taking off the swoosh and charging half price for your Psyche’s does not protect IP. What are thooooooose?
He’s getting cocky over there too. Chinese regulators have investigated Alibaba’s practices in the past but have never found violations egregious enough to warrant shutting them down. Taking a swing at a couple competitors, Ma said “You can’t stop Alibaba for two hours otherwise it’s going to be a disaster for China. You can stop Tencent for two days, you can stop Baidu (BIDU - Free Report) for two weeks and everything will still be okay.” Shots fired.
Even with projected 48% revenue growth for 2017, analysts really aren’t buying the BABA story yet. The stock has a Zacks Rank #5 (Strong Sell) to go along with a Value Score of D, and Growth and Momentum Scores of F. The Internet Commerce industry also ranks in the Bottom 17% of our Zacks Industry Rank. Four analysts covering the stock have dropped their estimates, changing our Zacks Consensus Estimates from $2.44 to $2.03 for the current year while next year’s number has gone from $3.15 to $2.47.
Every time you share this video, somebody buys a bootleg Coach purse for their girlfriend off Alibaba but she’s never seen a real one so you’re golden. Click Follow the Author right around here. Subscribe to the YouTube channel, Twitter @bartosiastics and come back here for all the Trending Stocks with Zacks.com, I’m Dave Bartosiak.