No matter how I look at it, Alibaba seems to be in a position quite similar to Meituan last year. The significant valuation boost Meituan saw after emerging from a deep slump can be explained by three main factors: First, the competition with Douyin slowed down, marked by the leadership changes at both Meituan and Douyin. Second, the focus shifted from burning cash on new businesses to profitability. Third, there was growing anticipation for the second growth curve from XIAOXiang Supermarket and Flash Sales. After two consecutive quarters of slightly better-than-expected performance, this alpha (outperformance) solidified. Alibaba also shares these three elements. While the e-commerce landscape is certainly not as strong as the local services sector, as long as the market confirms Alibaba’s market share remains stable for several months and GMV returns to growth, concerns about its core business will significantly ease. As for other miscellaneous areas, they are already being offloaded. Regarding the second growth curve, AI and cloud computing are major call options.
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