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Alibaba Group Holding Ltd (BABA)’s Disruptive Creation of Value Might Have a New Victim: Tencent Holdings

Alibaba Group Holding Ltd (NYSE:BABA)’s been growing at a rate of about 50% per year during the past five years, but this pace becomes more difficult to maintain as the market coverage is close to a maximum level and the company reached an impressive value of over $230 billion. Karine Hirn, founding partner at East Capital, stated her opinion on CNBC regarding the state of e-Commerce in China and the way Alibaba Group Holding Ltd (NYSE:BABA) influences it. 1

Tencent Holdings is another Chinese giant with a solid market capitalization close to $150 billion, which fell in the latest period by almost 4%. It seems that its subsidiaries in the e-commerce industry have suffered from Alibaba Group Holding Ltd (NYSE:BABA)’s influence over the market. However, Tencent Holdings has other opportunities, which aim mostly at social networking and online multiplayer games, and use these as safety vests, that could overturn the situation.

“We will stick with Tencent and we’re also very excited about Alibaba. I mean, we have overweight in our portfolio for IT, this is a very interesting sector,” said Karine Hirn.

Alibaba Group Holding Ltd (NYSE:BABA)’s considered to be at its peak of valuation as the company will not be able to grow consistently in China. Many analysts expect the company to expand its coverage to reach the biggest global markets any time soon. There’s no clear indicator or idea regarding Jack Ma’s strategy, however, the conceptual path to success is clearly defined.

“I think Alibaba has a vision, a vision which is not limited only to Taobao and their Tmall e-commerce. Their vision is about basically disrupting a number of sectors and it could be everything. So that’s what they’ve shown, that’s what they’re doing actually today already in China, for instance within finance,” mentioned Karine hirn.

Alibaba Group Holding Ltd (NYSE:BABA)’s new form of doing business will change the way companies provide services and monetize them, or it will help the company emerge as a monopolistic power in the e-commerce industry. In any case there are pros and cons to any of the possible outcomes, which have to evaluated properly to get even the slightest idea about how the company will do.

Breaking News: Tiger Global revealed a $500+ million stake in Alibaba Group Holding Ltd (NYSE:BABA) in an email sent to its investors.

Disclosure: none
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