E-commerce giant Alibaba (NYSE:BABA) appears to be caught in the crosshairs of an ongoing trade war between China and the United States. The threat of being de-listed from the New York Stock Exchange looms over BABA stock, and that possibility has some investors concerned.
In a contentious American election year, there’s not much point in trying to predict political outcomes. Maybe there will be a large-scale banning of Chinese stocks from American exchanges, or maybe there won’t.
Dumping your BABA stock shares because of something that might or might not happen isn’t necessarily a great idea. And basing your investing decisions on every little twist and turn in the political headlines isn’t a strategy that I recommend.
Instead, it’s probably better to concentrate on Alibaba’s growth story. As big as the company is, Alibaba just keeps on expanding. With this, it’s planting seeds for the future, something that BABA stock holders should appreciate.
A Closer Look at BABA Stock
What’s interesting about BABA stock is that it has had a couple of stagnant periods followed by big moves. For instance, BABA basically went nowhere in 2015 and 2016.
Then BABA stock ramped up in 2017. After that, BABA chopped around and made little progress for a couple of years. Finally, after China’s economy began to recover from the impact of the novel coronavirus, BABA took another big leg up.
I wouldn’t jump to conclusions and assume that the next phase will be a long sideways period for BABA stock. The important thing is to know that patience has historically paid off for loyal BABA shareholders.
And for long-term investors, your best bet is to focus on Alibaba as a company. That’s much easier on your sanity than analyzing all of the world’s political ups and downs. After all, solid companies tend to survive periods of international instability.
Grabbing Market Share
Investors should consider it a good sign that Alibaba’s seeking to diversify into different markets. That way, Alibaba won’t be entirely dependent on its foundational e-commerce business.
Thus, though it’s not a done deal yet, Alibaba is reportedly weighing an investment of as much as $3 billion into Grab Holdings, a ride-hailing company based in southeast Asia.
In the process, Alibaba may acquire some of the shares now owned by Uber Technologies (NYSE:UBER). Acquiring a stake in Grab could provide Alibaba with access to millions of users’ data along with a sizable delivery fleet.
It’s a savvy move on Alibaba’s part, and the finalization of this deal could spur some buying activity in BABA stock.
Next-Level Cloud Computing
Now, going in a completely different direction, let’s take a look at Alibaba’s new foray into cloud computing technology. Specifically, at the recent 12th annual Apsara Conference, Alibaba rolled out its very first cloud computer.
Shareholders should appreciate Alibaba’s venture into the future of cloud computing with this personal computer that can fit into your palm. Amazingly, the cloud computer only weighs around 60 grams. Yet, this product provides access to high-performance computing through back-end cloud resources.
Moreover, Alibaba could generate another revenue stream here. That’s because users of the computer would be able to pay for their cloud consumption through a subscription service.
Reportedly, Alibaba’s cloud computer is able to “reduce the rendering time of one frame high-resolution animation from 90 minutes using a traditional PC, down to only 10 minutes.” It’s conceivable, then, that Alibaba’s innovative cloud computer could profoundly disrupt the personal computer market.
The Bottom Line
I’ve provided you with a couple of examples of how Alibaba is making waves in a diverse array of market sectors. Therefore, there’s no need to pigeonhole Alibaba as just an e-commerce company.
This diversification will stand BABA stock holders in good stead during these politically tumultuous times. Worrying about every little news headline isn’t necessary as Alibaba remains on firm footing in multiple markets.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.