Alibaba Group Holding Ltd BABA made history by being the biggest IPO of all time. However, it faces the same challenge that any company even half its size faces: How to continue to grow.
Andrew Romans from Rubicon Venture Capital and Nicole Sinclair, senior stock analyst at The Street, were recently on CNBC to discuss new areas of growth for Alibaba and the risks it faces.
The Opportunity
Romans set up the discussion, saying, “Looking at [the] future for Alibaba, I would say, let’s look at mobile. The Internet in China is very mobile. The Internet in Africa is very mobile and on the numbers, these guys are crushing it. They had, I think, 54 percent of all the PayPal type mobile payments were done on mobile phones this year; the year before it was 22 percent. It’s a huge lift. I think they had 188 million mobile users in June; September was 217 million. So, on mobile, these guys are crushing it. I think that’s a good indication of the future.”
The Risks
“Well, there is no question that Alibaba is a huge winner -- lots of opportunity," Sinclair said. "I think that, whenever you have such a bullishness on a stock, even the sell-side analysts outperform across the board. You have to be wary of some of the potential risks near-term. One, we had 8 million shares come today [Friday, December 19], but we have 400 and some coming in March, 1.6 billion coming next September. So, I think that’s important to remind ourselves when we have this influx of supply."
Sinclair added, "I also think that we are having revenue acceleration right now, but we do have [a lot] of large numbers. So, we have to be wary of that, margins are going to be in question as well."
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