Alibaba Group (NYSE:BABA) is set to make a sizable investment in its retail platform, Taobao, to combat increased competition from social networking platforms. The news comes ahead of the release of the Chinese e-commerce giant’s first-quarter earnings on May 18.
With this fresh investment, the company aims to focus on content creation to attract customers. This is due to the rising trend among young people to purchase things after watching them in live-streaming videos on websites like ByteDance’s Douyin.
The Taobao Live broadcast user count has increased by 70% year-on-year in the period between April 1 and May 8. Meanwhile, the number of people entering stores with the help of live streams has nearly doubled.
Further, Alibaba is likely to introduce artificial intelligence-powered tools for merchants. Further, it plans to make necessary adjustments to Taobao’s fees and commission rates to benefit merchants.
Based on the last week’s conference notes published yesterday by Alibaba, Taobao CEO Trudy Dai said, “We will make huge, historic investments to scale up the user base for the benefit of merchants.” She added, “We will drive content creation in all areas, with much larger investment in content than ever before.”
Is BABA a Buy, Sell, or Hold?
Alibaba’s dominant position in the e-commerce sector and efforts to introduce new products in the Cloud unit may aid the company’s top-line expansion.
Importantly, Scion Asset Management’s founder Michael Burry is bullish on Alibaba and has doubled his stake in the stock to $10 million, as per the recent 13F filing. Moreover, 20% of his stock portfolio is made up of Alibaba and JD.com (JD).
Overall, Wall Street is optimistic about Alibaba, with a Strong Buy consensus rating based on 17 unanimous Buys. The average BABA stock price target of $149 suggests 68.7% upside potential. The stock is down 4% so far in 2023.
Investors looking to invest in this major stock might want to follow Loop Capital Markets analyst Rob Sanderson. Based on TipRanks’ data, he is the most accurate analyst for Alibaba stock. Replicating Sanderson’s position for one year would result in 59% of transactions generating a profit, with an average return of 15.52% per trade. Interestingly, the analyst reiterated a Buy rating on BABA stock about six days ago.
