Alibaba Stock Hits Record
October 09 2020 - 6:16AM
Dow Jones News
By Chong Koh Ping
Alibaba Group Holding Ltd.'s stock has hit a record high, as
investor confidence builds that the coronavirus pandemic has
accelerated China's rapid embrace of online commerce, and as its
financial affiliate Ant Group Inc. prepares to go public.
The recent rally has lifted Alibaba's market value above $800
billion, cementing its position as one of the world's most valuable
technology companies and opening a gap between it and Tencent
Holdings Ltd., China's other dominant tech group.
Its New York-traded American depositary receipts closed Thursday
at a record $300.54. Those shares have jumped 42% this year,
according to FactSet.
DBS Bank analyst Tam Tsz Wang said Alibaba's shares were
sluggish earlier this year when movement in much of China was
severely restricted, and as it struggled to fulfill a surge in
demand for goods bought online.
Still, the disruption helped Alibaba grow in smaller cities and
in home delivery of everyday items such as fresh fruit and
vegetables, he said. "We are starting to see some positive results
in the third and fourth quarter due to the positive structural
change that has happened," Mr. Tam said.
In contrast, Mr. Tam said that while Tencent benefited
immediately from the lockdown, investors now expect growth in its
games business to moderate from the third quarter onward as people
return to work and have less time to spend on gaming.
Carmen Lee, head of OCBC Investment Research, said the impending
listing of Ant, in which Alibaba holds a 33% equity stake, had
helped it outperform Tencent in the past month. Both companies are
up by similar percentages year to date.
Ms. Lee said investors seem to have shrugged off concerns that
U.S.-China tensions could hurt Ant's listing. Alibaba's stock kept
climbing despite reports the Trump administration was exploring
restrictions on Ant's Alipay and Tencent's WeChat Pay over concerns
that those payment platforms could threaten national security.
At an investor conference that ended Sept. 30, Alibaba said its
cloud-computing business would turn profitable and its logistics
arm, Cainiao, would have positive cash flow from operations in the
financial year to March, further boosting its stock, said Chelsey
Tam, a senior equity analyst at Morningstar.
"Generally, Alibaba's management's tone is about digitalization
and how Covid has accelerated it," she added, referring to
Covid-19.
Alibaba shares also trade in Hong Kong, where they hit an
intraday record of 293 Hong Kong dollars, the equivalent of
US$37.81, on Friday. The stock later pared gains to close 1.2%
lower at HK$286.20, slightly below last month's record close of
HK$291.20.
Write to Chong Koh Ping at chong.kohping@wsj.com
(END) Dow Jones Newswires
October 09, 2020 06:01 ET (10:01 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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