Alibaba (NYSE: BABA), the Chinese e-commerce king is all set to release its report on this Thursday. This has become much-hyped news amidst the trade war and poor Chinese economic data. That being said, Wall Street’s renowned analysts are not ready to let go the confidence they have in Alibaba, not just yet.
The reason being, Alibaba is investing aggressively in an attempt to gain a major portion of the market by regularly hiring delivery executives in huge numbers and thus expanding its offline presence as well. This is true by numbers, as the company’s revenue clearly balances its investments as a result of its aggressive marking strategy. Yet, analysts at the Wall Street are well aware of the short-term pains a company has to undergo if it were to reap long-term profits.
As Scott Devitt from Stifel Nicolaus states, “We remain comfortable with the lower long-term margin profile as it will allow the company to generate a higher level of absolute profit over the long term and should lead to increased efficiencies across Alibaba’s entire ecosystem.” And that’s true.
As far as the future of the company is concerned, it is looking to enter the Indian market, which is the sixth largest economy in the world and second largest in population. Alibaba has already invested in a few Indian companies such as the Paytm, an online wallet payment system and the Big Basket, an online grocery store.
With all such future plans and projections coupled with aggressive marketing, Alibaba is not going to slow down any time soon. Its tremendous two digit growth across all of its segments doesn’t seem to care much about the America-China trade war. Instead, Alibaba’s investors have long stopped caring about micro-level financials.