You may know little about Alibaba Group Holding Ltd., but you have surely heard of Jack Ma. He became the first Chinese business person to appear on the cover of Forbes. In April 2021, Jack Ma's fortune was estimated at $ 51.5 billion. His wealth and fame came from the Alibaba holding. In 1999, Jack Ma together with 17 partners created a website to facilitate trade between business people. Four years later, the company became profitable and gained worldwide popularity. In 2020, Alibaba was ranked the 6th world's largest brand. Today, anyone can profit from investing in the holding's shares.

How to do it? Read this article to find out.

About the holding

Alibaba has spread its activities in various fields. The holding includes companies rendering e-commerce, logistics, media, financial, and entertainment services. Besides, Alibaba consists of 700 structures registered in China and 520 foreign companies.

Here are the most famous of them:

  • AliExpress - an online store
  • Lazada - a marketplace targeted for users in Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam
  • Taobao - an online store and auction
  • Tmall - a marketplace with original goods of famous brands
  • Alibaba.com - a B2B marketplace
  • Ant Financial - a company facilitating online payments through the AliPay platform
  • Cainiao - a logistics company
  • Alibaba Cloud Computing - a cloud service for online businesses
  • Alibaba Pictures and AliMusic - a film company and online music marketplace.

Shares of Alibaba Group Holding, Ltd.

Profile:

  • IPO date: 2007/2014
  • Trading floor: NYSE
  • Ticker symbol: BABA
  • Capitalization: $572 billion as of July 2021

Alibaba shares have been listed twice. The first IPO was held on the Hong Kong Stock Exchange in 2007. At that time, 43% of the company's shares belonged to the American Yahoo! Subsequently, Alibaba's management bought back 20% of the securities, after which the company delisted its shares.

In 2014, Alibaba entered the New York Stock Exchange with American Depositary Receipts (ADRs). Nowadays, everyone can buy the company's shares on the NYSE. To do this, a trader needs to find a broker who provides access to this trading floor. Alternatively, you can try CFD trading that is available on favorable conditions with InstaForex.

The shares listed on the NYSE are deposited with Citibank N.A. in a volume of 16.5%. The largest share in the holding belongs to the Japanese Softbank Group that controls 32%. The share of 15.4% remains in the possession of Yahoo!. Founder Jack Ma owns 7.8% while 3.2% of shares belong to Joseph Tsai. Currently, the holding does not pay dividends to its shareholders.

The cost, performance, and future of Alibaba shares

After Alibaba ADRs were listed on the New York Stock Exchange, the stock price has jumped by 140%, to $ 214.04 from $ 88.85. However, this price is not a historical maximum for the company. The coronavirus pandemic has had a positive impact on business as it saw 49% growth in 2019 and a 30% rise in 2020. At some point, Alibaba's share price reached $ 309.9.

In early 2021, the company’s performance worsened as its shares price fell and the growth rate slowed down to 29%. Importantly, the slowdown was caused not by the company's activities or the weakening of the consumer interest, but by the tough policy of the Chinese government. The company was obliged to sell media assets and postpone the IPO of Ant Group subsidiary (AliPay) in the amount of $ 37 billion. Moreover, Alibaba received a record fine of $ 2.8 billion.

These factors have led to a significant pullback in BABA prices. However, experts agree that the government conflict is over and Alibaba shares are likely to go up again.

The management forecasts the holding's revenue will grow 29% to $144.12 billion by the end of the year. As for the shares price, analysts predict a significant increase in the long term (about $290 per share by the end of the fiscal year).

Top 5 facts justifying the purchase of Alibaba shares

  • Nowadays, the number of active Alibaba consumers amounts to 811 million
  • The consensus forecast suggests a rise in the shares price of 25% annually
  • Tmall China is the third most visited website
  • AliPay processes over 50% of all mobile payments in China
  • E-commerce companies that form the main segment of the holding sustainably increase their revenues. The pandemic has had a positive effect on buyers' activity. Lazada and AliExpress alone added 240 million users in a year.

What influences Alibaba shares and what to pay attention to before buying them

Some experts agree that Alibaba shares are currently undervalued. Their price mainly depends on the popularization and development of e-commerce. The pandemic, new technological developments, simplified logistics - all these factors are beneficial to the Alibaba group, and its shares price confirms this. As seen early this year, the government pressure on the company dented the investor confidence, but the tech giant managed to avoid some significant losses. Today, Alibaba continues investment activities which include the development of drones for cargo transportation, $1 billion donations to support startups, the expansion of data centers in the Philippines and Indonesia, the construction of an innovation center in Malaysia, and other projects.

The holding’s main sector is e-commerce that is actively expanding now. For example, in 2019, the volume of global Internet sales was $ 3.5 trillion. The statistical forecast suggests that this figure will double by 2023. In addition, the company has big plans for less developed markets and is actively competing for users from India.

To sum up

Alibaba is a promising investment tool. Despite a weak start of the year, buying Alibaba shares may be a wise investment decision in the medium or long term. To learn more about reliable Forex trading tools, go to this page.