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Alibaba Group Holding Ltd (BABA)’s Corporate Structure Remains A Concern: Cynthia Meng

Alibaba Group Holding Ltd (NYSE:BABA) will continue to register  accelerated growth according to Jefferies research analyst Cynthia Meng on the fact that it has not yet tapped the full potential of the Chinese market. During an interview on CNBC, Meng reiterated that Alibaba has the potential to increase its market-share as it is only selling to 21% of the total population in China.

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 Alibaba continues to dominate online transactions in China awaiting to see for how long the same will continue as JD.Com Inc. (ADR) (NASDAQ:JD) continues to ramp up competition in the space. China’s massive population has always been a key driver of Alibaba Group Holding Ltd (NYSE:BABA)’s accelerated growth awaiting to see if the company will seek to enhance its presence in international markets.  `

“We estimate Alibaba is only selling to about 21% of the total population and that is why I am saying it is less than 25%. But in 10 years we are expecting they are going to be selling to well over 50% of people in China. So the potential of upside is very high, “said Mrs. Meng.

Meng believes Alibaba will continue to grow heading into the future based on the fact that internet penetration in China currently stands at 50%. The same is expected to grow to highs of 85% in the next 10 years, margins that the company will look to tap into. The corporate structure of the company continues to be a niggling concern to investors as there is a feeling the management team holds extraordinary powers.

Meng argues that investors have not yet shunned Alibaba’s corporate structure concerns but are essentially keeping a close eye, waiting to see the kind of decisions the company will make heading into the future.

Alibaba Group Holding Ltd (NYSE:BABA) currently enjoys monthly active subscribers totaling 217 million awaiting to see if the same will grow with the growth of internet penetration in China. Alibaba has already posted earnings for the quarter ending September where revenue grew by 54% to highs of $2.74 billion with earnings per share clocking highs of 45 cents.

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