Double Eleven Shopping Day Is Coming: How Alibaba Wins

• Alibaba Group Holding Ltd BABA shares have plunged 32 percent year-to-date, and are trading significantly below their 52-week high of $120.
• Summit Research’s Henry Guo maintained a Buy rating on the company, with a price target of $81.
• While competition is intensifying ahead of the Double Eleven shopping event, Alibaba’s performance is likely to be strong, Guo stated.

Analyst Henry Guo said that a “strong Double Eleven shopping day” can be expected for Alibaba. The November 11 shopping day is around the corner and there seems to be rising competition between Alibaba and JD.Com Inc JD, “from merchant recruitment and logistic setup to market branding.”

Against the backdrop of a challenging economy, Double Eleven seems to be critical for both companies from the perspective of gaining market share and building a leadership position in the China B2C market, Guo mentioned.

Over the couple of months leading to the Double Eleven event, Alibaba seems to have increased its aggressiveness in pricing and offerings against JD. Guo added that Alibaba is likely to showcase its global strategy and cross-border commerce capability at this year’s shopping event.

In the report Summit Research noted, “While Alibaba Group hasn’t officially commented on its GMV expectations for this year Double Eleven shopping day, we believe investors expect roughly RMB80B GMV, which implies a 40% Y/Y growth (vs.2014’s 63% Y/Y).”

“Overall, we believe Alibaba is poised to deliver a strong performance on this year’s Double Eleven shopping day, which could serve as a near-term positive catalyst to BABA shares,” Guo stated.