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According to my bookie Charles Schwab (NYSE: SCHW), I bet $ 20,000 on Alibaba in 2016. I took out a profit of $ 13,000 and then deposited $ 17,500 more. I’m about $ 2,500 ahead of that.
During these four years, Alibaba has gone from being a speculative China game to a leading cloud and trading player. It has invested more in stores than Amazon (NASDAQ: AMZN). Microsoft (NASDAQ: MSFT) is doing well in the Asian cloud market.
Alibaba is in the news recently as founder Joe Tsai, who now owns the Brooklyn Nets, donated lots of protective equipment and fans to New York‘s fight the new coronavirus. This is just one of many pandemic donations made by the company and the Jack Ma Foundation worldwide.
The donations illustrate Alibaba’s development and China’s development. Alibaba shares are hot to watch.
The Alibaba story
Alibaba was founded in 1999 as a company from company to company. The goal was to make small Chinese producers competitive in large Chinese markets. Now it can do the same for American companies. This includes funding.
Alibaba has a comprehensive strategy that is part View (NYSE: V), part Salesforce (NYSE: CRM), part Walmart (NYSE: WMT) and part Amazon only. While US companies specialize in software, banking or commerce, Alibaba tries to do everything, whether you are a business or a consumer.
Under Daniel Zhang, an accountant who became CEO in 2015, Alibaba created “new retail.” This is a seamless combination of online and offline shopping. Alibaba now has about 60% of China’s e-commerce market.
Zhang then went back to the cloud. Alibaba now controls China’s cloud market and is the fourth leading player overall.
In the cloud, Alibaba offers a complete application suite, not just infrastructure and not just a platform. It also supports startups, some of which appear as stars.
In finance, Ant Financial, which operates Alipay’s mobile payment network, is worth $ 150 billion. It has agreements with 170,000 North American retailers.
Alibaba stocks today
The Alibaba share is no longer just a piece in China. It is a global competitor with a global presence and global ambitions. But it’s still Chinese.
Co-founder Ma, who retired last year, told reporters in 2014 that he liked Forrest Gump. But he’s more like Andrew Carnegie, a ruthless businessman who still sees money as a responsibility. He has been a member of the Chinese Communist Party all his adult life but is a modernist, not a Maoist.
Alibaba first became public in New York because US laws allow ownership of dual shares. It took a second listing in Hong Kong after dual-share structures were allowed there. Dual-share structures are still banned in China, so Chinese investors will need to convert the yuan to either Hong Kong or US dollars to enter the Alibaba share.
The conclusion of Alibaba’s dominance
Competition makes everyone better.
Alibaba is the biggest competitive threat to US companies since the web was spun.
This is good. Alibaba will make American companies stronger. If they understand that it goes after everyone, and if they get up to meet the challenge.
Meanwhile, US investors can make money from both sides. In addition to the Alibaba share, I own shares in Amazon, Microsoft and Apple (NASDAQ: AAPL), which extend across both sides. These companies should be the core of any modern portfolio.
Internet stocks have held up well during the crisis. The productivity they create and the deflation they enable is why the dollar index remains at around 100.
The Alibaba share has given China’s economy the same benefits we enjoy. But that’s not the end of the world. That’s just the beginning.
Dana Blankenhorn has been a finance and technology journalist since 1978. His latest book is Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, essays on technology available in the Amazon Kindle store. Follow him on Twitter at @danablankenhorn. At the time of writing, he owned shares in BABA, AMZN, MSFT and AAPL.