Alibaba Group Holding Ltd (NYSE:BABA) stock has had quite a 2017 so far. It’s up 100% year-to-date. In the past five years it’s up only 87%, so you can see that BABA stock is getting some respect now that the Chinese economy has begun to turn upward again.
Also bear in mind that this performance is coming from a company with a $433 billion market cap. That about 4x the size of International Business Machines Corp. (NYSE:IBM) and slightly smaller than Amazon.com, Inc. (NASDAQ:AMZN).
People talk about the juggernaut of AMZN stock, yet it has only made roughly one-third the move the BABA stock has in the same timeframe.
Many people talk about Alibaba as the AMZN of China. Yes, most of its revenue comes from its wildly popular e-commerce business. But like most those simplistic comparisons, BABA has so many other moving parts that it is represents much more.
Alibaba stock has a significant stake in “the Chinese Twitter Inc (NYSE:TWTR)”, Weibo Corp (ADR) (NASDAQ:WB). It also has Ant Financial Services Group that operates the world’s largest online and mobile payments platform as well as the world’s largest money market fund Yu’e Bao.
Alibaba also runs a credit rating agency and a facial recognition payment technology through Ant.
The point is, whatever direction you look, BABA stock is there or moving there. For example, in just the past month, the company announced that it was buying online gaming company EJoy.
For years, founder and CEO Jack Ma swore that Alibaba would never go down the gaming road. And now it has.
Given its size and strength in China, there’s little doubt that EJoy will be a major gaming company in coming years. And this is just one of many things that should add to the Alibaba stock growth story in the years ahead.
Some have voiced concern over the Chinese government’s stated efforts to more tightly regulate the exploding tech sector. Regulators have even said they want to take 1% stakes in certain tech companies and get a seat on the board.
But this shouldn’t be much of a concern for BABA stock owners, since the company is predominantly an e-commerce company, not a media company. Most of these regulatory efforts are aimed at media companies, over concern about political and anti-government statements made on social media.
BABA has a very solid relationship with the government and its media firm WB has already been through an examination by the Chinese government a few years ago.
This actually adds to the attractiveness of Alibaba stock, since some of its competitors may well get slowed down in this process. It has also committed to spend about $15 billion in the next three years on R&D efforts. That nearly doubles its current R&D spending.
The bottom line is, there’s a lot to like about BABA stock, and it’s now about 10% off its highs, likely taking a breather until its earnings report on Nov. 2. It’s a good time to take a position.
