What's in Alibaba's Future? 10 Things You Should Know
For founder Jack Ma, the run-up means he's now worth more than $20 billion, according to Forbes' estimates. Yahoo (YHOO), meanwhile, is now sitting on a stake that was worth more than $49 billion the day of the initial public offiering -- about $10 billion more than its current market cap.
Can Alibaba grow further? Don't answer yet. These 10 surprising facts may influence your thinking.
- A crown unlike any other. Alibaba isn't just China's leading e-commerce platform. The company serves 231 million annual active buyers, or more than 76 percent of the estimated 302 million Chinese who purchase goods online.
- More like eBay than Amazon. Alibaba is an almost entirely software-driven company that doesn't keep or develop inventory as Amazon does. Rather, the company uses logistics technology and a partner network to meet commitments to shoppers.
- Trading in line with Chinese peers. As expensive as Alibaba might seem, at 43.9 times earnings, the stock trades within spitting distance of local peers Baidu (BIDU) at 41.2 times earnings and Tencent Holdings (TCEHY) at 42.2 times earnings, according to S&P Capital IQ.
- Did we mention cloud computing? Alibaba Cloud Computing is capable of processing 3.6 million transactions per minute. The system serves more than 980,000 direct and indirect customers, making it a bit like China's version of Amazon Web Services.
- Astounding growth still ahead. Analysts peg Alibaba's long-term earnings growth at 29.9% percent annually over the next three to five years, according to S&P Capital IQ. Management expects similar gains, citing iResearch data that says Internet shopping is on pace to grow 27.2 percent annually from now through 2016.
- More business than the top U.S. shippers. Alibaba's logistics platform orchestrated delivery of 5 billion packages last year. By contrast, UPS (UPS) handled 4.3 billion deliveries over the same period.
- Some of the best margins in the Internet business. Alibaba's reported gross margin comes in at 73.5 percent. Only Facebook (80.9 percent) ranks higher among the "Internet Software and Services" companies tracked by S&P Capital IQ. It's a different story on the bottom line, where Alibaba leads the field with a 54.4 percent net income margin.
- Dwarfing not just eBay, but PayPal too. Subsidiary Alipay settled $5.8 billion in transactions value on last year's "Singles Day," a local spin on Valentine's Day. All told, Alipay handled $519 billion in payment volume last year vs. $180 billion for PayPal.
- An increasingly mobile business. Like most of its peers, Alibaba is trying to do more business via mobile devices. The effort appears to be paying off. As a percentage of overall merchandise value sold across the platform, mobile jumped from 14.7 percent in last year's third quarter to 19.7 percent in the fourth quarter.
- Cash is flowing. According to S&P Capital IQ, Alibaba generated $4.24 billion in cash from operations in the fiscal year ended in March. Over the trailing 12 months, the total rises to just over $5 billion. New transactions are generating even more profit than they had previously.
Motley Fool contributor Tim Beyers didn't own shares in any of the companies mentioned in this article at the time of publication. Find him on Twitter as @milehighfool. The Motley Fool recommends and owns shares of Amazon.com, Baidu, eBay, Facebook and Yahoo. The Motley Fool recommendsUnited Parcel Service. Try any of our Foolish newsletter services free for 30 days. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.