After a much publicized and successful IPO, Alibaba Group Holding Ltd (NYSE:BABA) stock has resorted to trading at the mid $80 range. Analysts at UBS AG (NYSE:UBS) remain confident that the stock could clock highs of $100 in the coming months after initiating a ‘Buy’ rating. During an interview on CNBC, MySpace Co-Founder, Chris Dewolfe, pointed out that Alibaba’s diverse business model will work to its advantage in terms of profits going forward.
According to analysts at the research firm, Alibaba’s future growth will mostly be fueled by the company’s growing presence in mobile as well as in popular social networks. Alibaba Group Holding Ltd (NYSE:BABA) has already announced that Costco Wholesale Corporation (NASDAQ:COST) will start selling merchandise in its Tmall Global. The platform that allows partners to sell products without having to set up physical stores in China.
“They are getting so involved in so many different businesses and the middle-class population is growing so quickly. It is a very interesting stock to look at and obviously in e-commerce they are getting into web applications, entertainment applications, they are doing partnerships with Costco’s. It is incredibly a diverse company that is very aggressive, “said Mr. Dewolfe.
According to UBS AG (NYSE:UBS), Alibaba will benefit a great deal from its massive active users which currently stand at $188 million with 33% of its transactions taking place on the mobile. An increase in market-share for the giant Chinese company will be the biggest test going forward due to an increase in competition in the online platform especially from JD.com.
A point of concern at the moment for many investors is the fact that UBS AG (NYSE:UBS) valuation does not factor in any math, but focuses on future synergies that are expected to work to the company’s advantage. CNBC’s Jon Frott argues that investors remain skeptical on Alibaba Group Holding Ltd (NYSE:BABA) closing in on the $100 mark with the ongoing uncertainty in the e-commerce space as well as increased competition.
“You’ve got all this uncertainty not just in their local market about the Chinese economy where it goes from here, but also in the entire macro-environment with high valuation stock and IPO stocks in general, “said Mr. Frott
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