Alibaba: The Chinese Got It Right

Summary

• The Hong Kong listing of Alibaba can be seen as a strong sign of confidence that should further propel the stock.
• Chinese online consumer spending is second to none and is dwarfing the Black Friday/ Cyber Monday sales records set in the U.S.
• China's middle class is on the rise.
• The narrative should change with investors finally starting to focus on the fundamentals and the tremendous long-term growth opportunity the company offers.

Ever since my most recent article on Alibaba (NYSE:BABA), where I concluded that Alibaba currently "does not get the appreciation and love from the markets it deserves," things have changed following the highly anticipated record Hong Kong listing in late November, with the stock hitting a fresh 52-week high of around $200 before being weighed down by concerns regarding the timing and scope of the phase one trade deal.

Despite that quick rally and increased uncertainty regarding a trade deal, the stock remains a strong buy, as Chinese investors have shown that they are willing and capable of giving Alibaba the valuation it deserves. This positive sentiment will also be reflected in the NYSE-listed ADRs, and thus, should further propel the stock price over the short-to-medium run given the company's various growth catalysts and strong business performance. Here are my top 3 reasons for investing into Alibaba now.

Source: Alibaba Investor Relations

#1 Chinese online consumer spending is second to none and is dwarfing the Black Friday / Cyber Monday sales records set in the U.S.

While the ecommerce and retail sector on the U.S. is heavily reliant on the entire holiday shopping period spearheaded by the iconic Black Friday to Cyber Monday shopping spree, the biggest day for online sales in China and for Alibaba is Singles Day on 11/11.

Alibaba has been setting new records every year and generated a monumental $38 billion in sales over the 24-hour Singles' Day event, reflecting growth of 26% compared to 27% in 2018. Both in absolute and relative terms, this is an unheard-of performance given that Alibaba has been growing by strong double digits in the period in between, and thus, the growth of 26% in 2019 is worth much more than the 27% growth seen in 2018.

That $38 billion figure

Analyst’s Disclosure:I am/we are long BABA, AMZN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I am not offering financial advice but only my personal opinion. Investors may take further aspects and their own due diligence into consideration before making a decision.