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Why China Isn't Killing Alibaba

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Why China Isn't Killing Alibaba

Investors who correlate China's economic woes as being a bearish sign for its largest e-commerce player, Alibaba Group Holding Ltd (NYSE: BABA), may be mistaken. That is, at least according to MKM Partners latest survey involving Chinese consumers.

Barron's posted MKM Partners latest survey of Chinese consumers with a focus on: 1) spending intentions, 2) preferred shopping sites, 3) preferences of online marketplace versus direct seller, 4) impact of mobile and 5) receptivity to new online categories.

The analysts also included questions in their survey to identify what impact (if any) the recent decline in the stock market has on spending.

Related Link: Why Alibaba's Buyback Might Not Mean Guaranteed Gains For Investors

Bricks-And-Mortar Versus Clicks-And-Order

The results appear to be a good sign for Alibaba, as 75 percent of respondents indicated they would not reduce their near-term shopping. Meanwhile, 42 percent of respondents said they plan on shifting some of their spending budget toward online shopping versus 8 percent of respondents that plan to shift part of their budget away from online and into physical retail.

Moreover, Alibaba's properties (including Tmall and Taobao) are preferred by 67 percent of respondents, while one of Alibaba's closest peers, JD.Com Inc(ADR) (NASDAQ: JD), is preferred by 19 percent. Amazon.com, Inc. (NASDAQ: AMZN) ranked third at 6 percent, while every other online retailer combined accounted for the other 8 percent.

Consumer Feedback

"We are encouraged by initial consumer feedback that a potential spending dislocation may be somewhat muted and may accelerate the shift in allocation to online," MKM Partners noted in its findings. "The currency devaluation should help Alibaba's cross-border initiatives but do little to offset the conversion drag on dollar-denominated earnings per share (about 5 percent)."

Bottom line, the analysts continue to believe that Alibaba's long-term thesis remains intact and recommend that investors "continue to accumulate" Alibaba shares.

Latest Ratings for BABA

DateFirmActionFromTo
Oct 2020OppenheimerMaintainsOutperform
Oct 2020NeedhamMaintainsBuy
Oct 2020KeyBancMaintainsOverweight

View More Analyst Ratings for BABA
View the Latest Analyst Ratings

 

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Posted-In: Barron's China China eCommerceAnalyst Color Long Ideas Top Stories Analyst Ratings Trading Ideas Best of Benzinga

Latest Ratings

StockFirmActionPT
AMDSusquehannaMaintains95.0
BABAOppenheimerMaintains335.0
EAJefferiesMaintains150.0
MELIJefferiesMaintains1,560.0
NOMDBTIGInitiates Coverage On30.0
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