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Alibaba's Ant Financial Enters U.S. with EyeVerify Buyout

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Alibaba Group Holding Limited’s (BABA - Free Report) financial service affiliate Ant Financial has reportedly purchased EyeVerify Inc., a Kansas City, MO-based eye-scanning startup.

While Bloomberg reported that the deal is worth $70 million, some insiders said that the purchase price amounted to $100 million.

EyeVerify’s optical recognition technology known as EyePrint ID is in use by some credit unions and regional banks across the U.S. They have added this software solution to their mobile apps for secure and convenient biometric authentication of clients.

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Ant Financial's First Investment in the U.S.

We note that with its first ever investment in the U.S. Ant Financial is eyeing multiple benefits. Apart from upgrading its own payment service Alipay, the move will help the company target U.S. based products in the near future. EyeVerify, on the other hand, will get access to more than 450 million customers who use Alipay’s services.

The move seems to be a part of Alibaba’s attempt to bring U.S. merchants closer to Chinese consumers. With the same objective, it had earlier invested in companies like Snapchat, Quixey, Lyft and Tango.

Our Take

As Alibaba continues to expand in the U.S., it will increasingly be up against well established players like eBay Inc. (EBAY - Free Report) and Amazon.com, Inc. (AMZN - Free Report) , who have been seeing great success.

eBay’s mobile payment system, PayPal, is very popular among U.S. consumers. PayPal is getting increasingly active in the offline segment as well, introducing new solutions almost regularly. Its payment volumes have consistently increased in double digits on a year-over-year basis with both domestic and international contributing.

Additionally, Apple Inc.’s (AAPL - Free Report) Apple Pay, the new mobile payment system that allows iPhone 6 and 6 Plus users to pay bills through Apple’s Touch ID application at any wireless pay terminal, is gaining momentum.

Therefore, Alibaba’s services will take time to gain a foothold and replicate their earlier success.

Currently Alibaba carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Interested in IPOs? Check out the special edition of Zacks Friday Finish Line below, where Editor Maddy Johnson and Content Writer Ryan McQueeney interview Kathleen Smith of Renaissance Capital about the IPO market in 2016 (see part two here).

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