Chinese tech giant Alibaba’s (BABA) AliExpress Korea is set to establish a joint venture (JV) with South Korean retailer Shinsegae’s e-commerce platform Gmarket. The deal was first reported by Bloomberg News, which stated that the JV is valued at $4 billion. Shares of Shinsegae affiliate E-Mart gained 5.5% in Seoul today, while Alibaba’s (HK:9988) Hong Kong-listed shares were up 2.7%.
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More on Alibaba and Shinsegae’s JV
The joint venture will be established by AliExpress Korea and Gmartket in 2025. The JV is expected to help these entities strengthen their position in the South Korean market and fight competition from local players like Naver Corp. and Coupang Inc. (CPNG). South Korea’s retail and macro conditions are under pressure due to the political chaos caused by President Yoon Suk Yeol’s declaration of martial law and his impeachment.
This JV is in line with Alibaba’s initiatives to expand its international presence amid lackluster growth in the Chinese e-commerce market. Macro uncertainty and intense competition from rivals like ByteDance and PDD Holdings’ (PDD) Pinduoduo have been weighing on Alibaba’s domestic e-commerce business. The company recently announced that it is integrating its domestic and international e-commerce operations to enhance efficiency.
It is worth noting that despite this collaboration, AliExpress Korea and Gmarket will continue to operate independently. The JV will help Gmarket leverage Alibaba’s global presence and advanced technologies to improve its efficiency, connect Gmarket sellers with global markets, and drive synergies to improve its competitive position.
Is BABA Stock a Buy, Sell, or Hold?
Alibaba is taking several initiatives to streamline its operations and revive its core businesses like e-commerce and cloud computing. The company is also trying to capture growth opportunities in the generative AI space. Wall Street has a Strong Buy consensus rating on BABA stock based on 14 Buys versus only one Hold rating.
The average BABA stock price target of $127.05 implies about 49% upside potential. BABA ADR (American Depositary Receipt) is up over 10% year-to-date.
