The share of Alibaba (WKN: A117ME) continues to be a rapid and interesting growth story. The Chinese Internet company is represented in the three megatrend areas of e-commerce, cloud and, via Ant Financial, also in the segment of digital payment services. This in turn leads to steady growth, as a look at the latest figures has shown.
However, as an investor you shouldn’t rely on short-term details. Not on numbers either, but on the vision behind a company like Alibaba. Fortunately, the management of Alibaba and the current CEO Daniel Zhang recently wrote a letter to the investors, in which he deals with important aspects.
With this in mind, let’s take a look at relevant topics. Small spoiler: The growth and vision behind the group are of course a focus that is easy to recognize in this letter.
About the opportunity and the market
A first topic that is of crucial importance for investors in the long term is growth. As well as the risk-reward ratio that the market has to offer. In the aforementioned letter to the investors, management first deals with the current development due to the corona virus. This, in turn, means that some have existential problems that could be overcome by the community. Honestly: What else should Alibaba as a platform operator say here?
But it will definitely be remarkable. Namely in the following passage, which deals with the general, longer-term prospects that Alibaba has. The CEO speaks of long-term certainty despite short-term uncertainty. Translated it says here:
But even in a highly uncertain world, we can still find security. We know without a doubt that the ongoing digital transformation of our economy and society will be unstoppable. COVID-19 once again prompted us to fundamentally re-evaluate our relationship with the world around us. It has triggered the development of brand new digital solutions for life, work, education, corporate governance and the public service. Digitalization is the new norm today.
With this passage, the CEO of Alibaba should clearly emphasize the opportunity potential for Alibaba. Alibaba is the measure of all things, especially when it comes to digitization or the digitization of retail. That in turn speaks to me that Zhang now rates medium to long-term opportunities higher than short-term risks.
About reaching and setting goals
A second topic that should be extremely relevant for all investors is Alibaba’s goals. On the one hand, this affects the achievement of the previous goals in the last fiscal year. But also the long-term vision behind the internet company. Zhang very openly and directly delivers concrete figures that are measurable. Here are the highlights to keep an eye on until 2036:
In the past financial year, despite the impact of the pandemic, Alibaba achieved its strategic goal that we set five years ago was to exceed the $ 1 trillion GMV. That was an important milestone for Alibaba, especially in the context of total annual sales of $ 6 trillion in all retail in China. Our next goal is to serve more than 1 billion consumers in China over the next five years on the path to globalization […]. Our long-term goal is to serve 2 billion consumers worldwide, create 100 million jobs, and provide the necessary infrastructure to support 10 million small businesses so that they can become profitable on our platforms by 2036.
Some very ambitious goals that Alibaba sets out here. However, given the success to date and from the rear-view mirror, these could be realistic. However, the Chinese e-commerce player already accounts for a total of one sixth of the annual retail turnover. A remarkable brand power that has since emerged here. That, in turn, should also protect future success.
A letter worth reading!
Admittedly, these were just two highlights that I picked and translated from the English letter to the investors and ultimately wanted to share with you. There are a few other things you may also be interested in. Overall, the vision and growth appear to be right. That should please investors.
The post Attention, Alibaba investor: Management wants to let you know now! appeared first on The Motley Fool Germany.
Vincent owns shares in Alibaba. The Motley Fool owns shares of and recommends shares in Alibaba Group Holding Ltd ..
Motley Fool Deutschland 2020