We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Alibaba Continues its Overseas Push, Invests in Paytm
Read MoreHide Full Article
Shares of Alibaba Group Holding Limited (BABA - Free Report) appreciated 41.7% over the last one year compared with the Zacks Internet Commerce industry’s gain of 40.8%. This outperformance was largely backed by the company’s near monopoly in the Chinese e-commerce market and strengthening position beyond it.
Alibaba is now expanding its international footprint by putting cash into India’s Paytm E-Commerce, the e-commerce wing of the Paytm group. Alibaba.com Singapore E-Commerce Pvt Ltd, one of the retail giant’s 40 subsidiaries and consolidated entities, has already poured $177 million for almost 36.3% stake in Paytm E-Commerce.
Alibaba and its associates also hold the largest chunk of One97 Communications’ share, which in turn has a stake in Paytm E-commerce. Paytm has also raised $23 million from venture capital fund SAIF Partners by selling its 4.66% stake.
What’s Behind the Move?
Amazon.com (AMZN - Free Report) is the common competitor of Alibaba and Paytm in India. Moreover, Alibaba faces tough competition from Amazon in the U.S. We note that Alibaba has successfully prevented Amazon from encroaching into its home turf. The recent investment in Paytm reflects a clever move to prevent Amazon from gaining market share in India.
Another factor is the ongoing e-commerce boom in India along with growing adoption of smartphones. The demonetization implemented by the Indian Government and its growing focus on digital mode of payments presents significant growth opportunity for smartphone-based payment applications. Alibaba appears to be smart enough to foresee that online payment companies could be a major beneficiary of this boom. It could leverage on Paytm’s payment business operated by Paytm Payments Bank Ltd, going forward.
The investment in Paytm also diversifies Alibaba’s business as e-commerce growth has slowed down in China. Besides buying stakes of e-commerce companies and pushing its AliExpress site in emerging markets, the company is also exploring the offline retail space.
Last month, the company entered into a strategic partnership with Bailian Group to leverage on its big data capacities and to explore new retail opportunities across outlet design, technology research and development, customer relationship management, supply chain management, payment and logistics.
It has also partnered with Intime Retail Group Co Ltd founder, Shen Guojun, in a 2.6 billion bid to privatize Intime and purchased a stake in grocery chain Sanjiang Shopping Club Co Ltd.
We also see Alibaba’s growing interest in the global logistics business. The company has been exploring this space with investments in couriers and warehouses in the recent years. It has opened its own logistics service known as Alibaba Logistics.
Recently, the company sealed a partnership with Maersk, a unit of Denmark's A.P. Moller-Maersk and the world’s biggest container shipping line, to offer online reservation of space on Maersk’s vessels. The service eliminates freight forwarders from the booking process and limits their services to haulage.
It seems that Alibaba is keeping its door open for other business arenas, in case the online retail industry hits a roadblock.
Zacks Rank & Stocks to Consider
Currently, Alibaba has a Zacks Rank #1 (Strong Buy).
For the current year, while estimates for Applied Materials went up 8.7%, the same for Advanced Energy remained unchanged in the past 30 days.
8 Stocks with Huge Profit Potential
Just released: Driverless Cars: Your Roadmap to Mega-Profits Today. In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Alibaba Continues its Overseas Push, Invests in Paytm
Shares of Alibaba Group Holding Limited (BABA - Free Report) appreciated 41.7% over the last one year compared with the Zacks Internet Commerce industry’s gain of 40.8%. This outperformance was largely backed by the company’s near monopoly in the Chinese e-commerce market and strengthening position beyond it.
Alibaba is now expanding its international footprint by putting cash into India’s Paytm E-Commerce, the e-commerce wing of the Paytm group. Alibaba.com Singapore E-Commerce Pvt Ltd, one of the retail giant’s 40 subsidiaries and consolidated entities, has already poured $177 million for almost 36.3% stake in Paytm E-Commerce.
Alibaba and its associates also hold the largest chunk of One97 Communications’ share, which in turn has a stake in Paytm E-commerce. Paytm has also raised $23 million from venture capital fund SAIF Partners by selling its 4.66% stake.
What’s Behind the Move?
Amazon.com (AMZN - Free Report) is the common competitor of Alibaba and Paytm in India. Moreover, Alibaba faces tough competition from Amazon in the U.S. We note that Alibaba has successfully prevented Amazon from encroaching into its home turf. The recent investment in Paytm reflects a clever move to prevent Amazon from gaining market share in India.
Another factor is the ongoing e-commerce boom in India along with growing adoption of smartphones. The demonetization implemented by the Indian Government and its growing focus on digital mode of payments presents significant growth opportunity for smartphone-based payment applications. Alibaba appears to be smart enough to foresee that online payment companies could be a major beneficiary of this boom. It could leverage on Paytm’s payment business operated by Paytm Payments Bank Ltd, going forward.
Alibaba Group Holding Limited Revenue (TTM)
Alibaba Group Holding Limited Revenue (TTM) | Alibaba Group Holding Limited Quote
The Bigger Picture
The investment in Paytm also diversifies Alibaba’s business as e-commerce growth has slowed down in China. Besides buying stakes of e-commerce companies and pushing its AliExpress site in emerging markets, the company is also exploring the offline retail space.
Last month, the company entered into a strategic partnership with Bailian Group to leverage on its big data capacities and to explore new retail opportunities across outlet design, technology research and development, customer relationship management, supply chain management, payment and logistics.
It has also partnered with Intime Retail Group Co Ltd founder, Shen Guojun, in a 2.6 billion bid to privatize Intime and purchased a stake in grocery chain Sanjiang Shopping Club Co Ltd.
We also see Alibaba’s growing interest in the global logistics business. The company has been exploring this space with investments in couriers and warehouses in the recent years. It has opened its own logistics service known as Alibaba Logistics.
Recently, the company sealed a partnership with Maersk, a unit of Denmark's A.P. Moller-Maersk and the world’s biggest container shipping line, to offer online reservation of space on Maersk’s vessels. The service eliminates freight forwarders from the booking process and limits their services to haulage.
It seems that Alibaba is keeping its door open for other business arenas, in case the online retail industry hits a roadblock.
Zacks Rank & Stocks to Consider
Currently, Alibaba has a Zacks Rank #1 (Strong Buy).
Other stocks worth considering in the broader technology sector include Applied Materials, Inc. (AMAT - Free Report) and Advanced Energy Industries, Inc. (AEIS - Free Report) , each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
For the current year, while estimates for Applied Materials went up 8.7%, the same for Advanced Energy remained unchanged in the past 30 days.
8 Stocks with Huge Profit Potential
Just released: Driverless Cars: Your Roadmap to Mega-Profits Today. In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>