Friday, November 10, 2017

Alibaba's Singles Day Revenue estimated as $24B by Citigroup

Alibaba's Singles Day Revenue estimated as $24B by Citigroup

Tomorrow (11 Nov Saturday) will be Alibaba’s ($BABA) Singles’ Day event for this year. Last year, the event brought in $17.8B. Citigroup estimates 2017 sales of $24B.

There are more than 60K global brands participating in this year's Singles Day event including Lululemon, Gap, Mac, and Macy’s. This year also marks the first time certain physical retailers participating and promoting the sale event inside existing stores or temporary storefronts.

Singles Day started as Alibaba's event but competitors like and other smaller players quickly take advantage of the event too. So Singles Day event is not just Alibaba's event but almost like Boxing Day in the Western world.

In Q2'17, Alibaba’s B2C Tmall e-commerce platform held a 51.3% sales share in the Chinese e-commerce retail market while held a 32.9% share according to eMarketer. Together these two companies hold 84.1% of China B2C.

In an economy growth just upgraded to 6.8% from 6.7% by IMF, I believe these two companies practically own all the benefits of what China online retail commerce can offer. (see news here) It seems that investing in both companies will make sense despite their valuations may seem high. However, if you believe in the long term and management your exposure according to your risk tolerance level properly, these two stocks seem to be good investment to be in.

The growth of eCommerce in China is a mega-trend. I believe that the online retail business will grow even when the overall economy's growth may be a bit slower. This is because these two giants are simply big enough and technologically advance enough to reap a big portion of the benefits from other less powerful retailers as number of mobile phones continue to grow. Speaking of technologies, Alibaba is not just online commerce but also in online payment, cloud computing and micro-financing.

I trade both Alibaba and from time to time. Despite that I am in and out from time to time, I am really just trying to minimise my risk. My trades are long only based on my assumption of a secular growth sector for a long time to  come.