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Alibaba Group Holding Ltd (BABA) Falling Victim To Its Own Success: Alan Knuckman

Apparently the success of the ever so publicized Singles’ Day has brought the Chinese e-commerce giant, Alibaba Group Holding Ltd (NYSE:BABA), to its knees. This new development was discussed by Jonathan Marino and Alan Knuckman, chief market strategist with BarChart Bullseye Options, on TheStreet.

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“When it comes to Alibaba Group Holding Ltd (NYSE:BABA) and their Singles’ Day, the amazing follow up to that is that the infrastructure couldn’t handle shipping that many packages, so it shut down shipping and people were just happy if they were going to get their stuff within a month or two. There are some limitations, you can sell, but you have to deliver, so you have to think about that in those terms that can also be helpful for us in the United States […],” informed Knuckman.

The lesson for U.S. that Knuckman mentioned at the end pertained to delivery companies like FedEx and UPS, who form a significant part of how much American counterparts of Alibaba Group Holding Ltd (NYSE:BABA), like Amazon and eBay can sell in peak seasons like Christmas.

Marino branded Alibaba as too big to mail, as a play on too big to fail analogy. The underestimation of its infrastructural capabilities will not only affect Alibaba Group Holding Ltd (NYSE:BABA)’s reputation among its customers, but is also a welcome sign by its Chinese competitors including Tencent and JD.com who must bee hoping scoop up these disgruntled customers.

Alibaba Group Holding Ltd (NYSE:BABA) has lately been experiencing some pull back in the equity market. However the shares are up in the pre-market trading by 2.2%. The stock was trading at $109.8 at the closing bell yesterday.

There has also been news about Alibaba Group Holding Ltd (NYSE:BABA) aiming to raise some more cash through a sale of bonds amounting to nearly $8 billion. This is primarily to service its existing debt lines.

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