Alibaba (NYSE: BABA) is a Hangzhou, China based e-commerce website that promotes the leading online and mobile forums in retail and wholesale trade, as well as cloud computing and other services. According to Alibaba’s website, the company provides technology and services to enable consumers, merchants, and other participants to conduct commerce in its ecosystem.
Alibaba In The News
Alibaba announced its second quarter earnings on Tuesday, November 4th after market close, reporting stellar results and a strong fourth quarter forecast. This is the first earnings statement the e-commerce website has made since its record breaking IPO earlier this year.
During its Q2 report, Alibaba reported $0.45 earnings per share on a diluted, Non-GAAP basis, meeting analysts’ expectations. The e-commerce website had total revenue of $2.74 billion, exceeding analysts’ expectations of $2.61 billion as polled by Rueters. The company’s gross merchandise volume increased 49% on a year-over-year basis. In addition, the number of active buyers rose to 307 million from 279 million the year prior.
Jonathan Lu, Chief Executive Officer of Alibaba Group, said in the report, “We delivered a strong quarter with significant growth across our key operating metrics.” He continued, “Our business continues to perform well, and our results reflect both the strength of our ecosystem and the strong foundation we have for sustainable growth. On our China retail marketplaces, gross merchandise volume for the quarter increased 49% and annual active buyers increased 52% year on year. We extended our unrivaled leadership in mobile with 217 million monthly active users on our mobile commerce apps in September and US$95 billion in mobile GMV for the twelve months ended September 2014. We are also encouraged by continued improvement of mobile monetization which demonstrates the strong commercial intent of our users.” Following the announcement of its Q2 report, Alibaba shares rose about 3% in afternoon trading on Tuesday.
A Financial Expert’s Opinion
On November 4th, Cantor Fitzgeral analyst Youssef Squali maintained a Buy rating on Alibaba Group with a $110 price target following the company’s earnings results. He explained, “As expected, BABA’s 2Q:FY15 results came in strong, particularly on the top line, with accelerating revenue growth, while the bottom lines were somewhat noisy with higher SBC, increase in amortization expenses and consolidation of newly acquired businesses.”
Squali continued, “Not surprisingly, management refrained from guiding but suggested that investments in new initiatives and increased mktg for the all-important 11/11 promotional event, are likely to remain elevated. A differentiated pricing model, strong brand and unmatched scale continue to give Alibaba an unfair competitive advantage relative to peers both in and outside China. We believe the company’s outsized growth and margin profiles should support higher valuation over time.”
Squali currently has an overall success rate of 74% recommending stocks with a +28.3% average return per recommendation.
Youssef Squali’s Past Recommendations
Squali has experience in rating stocks in the technology sector including LinkedIn (NYSE: LNKD) and Facebook (NASDAQ: FB). He has rated LinkedIn 10 times since 2009, earning an 86% success rate recommending the stock. Furthermore, Squali has rated Facebook 20 times with a 95% success rate.
On the other hand, Squali does not always see success from his recommendations. For example, he has rated Shutterfly (NASDAQ:SFLY) 4 times but with only a 33% success rate.
The internet giant that is Alibaba is as strong as ever, with Youssef Squali in full support. Do you trust Squali’s latest recommendation based on his financial advice history?