0935 Monday 12 November 2018

It took just 85 seconds for Alibaba to make $1bn in revenue on Sunday… Who said that China would suffer from a Trade War?

Ten years ago, Alibaba created a new holiday that would rival Valentines Day in which single folk would treat themselves to gifts. Move forwards to today and Jack Ma’s Singles Day continues to smash revenue records year after year. But despite all the glowing headlines, the most cynical of analysts will point towards signs of saturation point are starting to show themselves as growth dips for the first time since inception.

On Sunday 11 November, Chinese consumers took to the internet to drum up a grand total of $30bn in sales on Alibaba’s site smashing last years record total of $25bn. The holiday that rivals the Western Black Friday and Cyber Monday has seen continual growth every year since it began in 2008 and this year it took just under 16 hours to smash last years total.

Although there are plenty of positives to take out of yesterday’s facts and figures, it is worth noting that this was the first year in which growth dipped in year on year performance. 2017 saw a 40% annual growth in sales for Alibaba which dropped to a 27% growth in sales this year, however when you consider the incredible growth that the holiday saw in previous years, it must have been expected that a slow down would have occurred at some point and reason for worry should perhaps only set in when growth turns either neutral or negative.

On the subject of trade wars, Daniel Zang, CEO of Alibaba, was quoted in an interview as saying “I would say nobody likes trade war and nobody likes the uncertainty of the economic condition. But what we always do is that to try to find opportunities in the tough time. If people have some pain points, this means some opportunities. How to help people in the tough time to get more business, not only in China but also in the global markets. For Alibaba, we always think about our mission, which is make it easy to do business anywhere. I think it's more relevant today in this condition.".

Alibaba (BABA), which is traded on the NYSE, has not had the greatest of years in terms of stock performance and has seen a slump of nearly 16% in 2018. Earlier in the year, inspirational chairman Jack Ma announced his intention to stand down from his position, but his work and vision has set a bright future for the company.

All eyes will be on Alibaba’s stock price as the market opens in the morning trading session in the US, and in early pre-market trading BABA is currently in positive territory. To get further analysis on the firm, please don’t hesitate to contact a broker directly on 0121 454 0770.

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