In every marketplace, two crucial things happen; it is either you are buying or selling. However, someone must be willing to sell what you want to buy. The same thing applies to Alibaba stock; if it is available in the marketplace, you can purchase the shares. However, some things need to be considered by a buyer before investing in any company’s stock.
Although Alibaba is a Chinese-based company in a country with the second largest economy, it does not mean it will be a good buy. Before purchasing Alibaba stock, you need to study the Alibaba stock forecast, which will guide you through making your decision. After going through this guide, you will be able to make your decision on whether Alibaba stock is a good buy or not.
Three Reasons to Buy Alibaba Stock
Alibaba is among the giant companies in the e-commerce industry, and if you are not sure whether to buy its shares, these reasons should convince you:
- Dominant business in China
- Stellar financials
- The stock is a bargain
Dominant Business in China
Alibaba hugely influences many businesses in China, including having a 33 percent ownership of Ant Group. Based on the evaluation of the worth of each company in the e-commerce industry, Alibaba has the highest value, which amounts to 69 percent.
In a year, there are about 11.3 billion purchases through Alibaba sites which are actively used in China by approximately 912 million people. About 1.17 billion people were active users of the sites in 2020, and the purchases were about 1.2 trillion.
The growth the company is experiencing is one of the reasons why the stock of the company is worth buying. The profit made by Alibaba in 2020 is 109 billion dollars which is a 41 percent increase compared to the year before. Likewise, during the first quarter of 2021, the company realized a profit of about 32 million dollars.
Based on the Alibaba stock forecast, the company is estimated to make a 30 percent increase in revenue in 2021, which is 143 billion dollars. Investors buy the stock because the company can generate money through various means.
The management of the company’s financials makes it flexible such that it can spread its wings either by acquiring an existing business or creating a new one. Since it is ascertained that once the profit increases, the stock price will also increase.
The Stock is a Bargain
Once many companies, especially the ones listed in the S&P 500 start increasing in value, their stock price also increases such that investors that want to buy the company shares will buy at a high price. Although Alibaba is growing, you can still purchase the company’s stock cheaply. However, it is vital to study the Alibaba stock forecast to know the best time to buy the shares at a cheap amount.
Why Is It Not A Good Buy?
There is a decrease in the company’s stock due to the political interference the company faced after the founder of Alibaba criticized the China financial system. The criticism also led to the blocking of the IPO for Ant Group.
Furthermore, because Alibaba Group Holding Limited is structured, it is possible to break the law in China. The company had to pay a fine of about 2.8 billion dollars to the regulatory body in China after being charged with anti-competitive practices.
All these have negative effects on the company’s stock price, and the continuous involvement of the regulators can further worsen it. Recently, there have been some controversies surrounding the disappearance of the founder of the company. Many investors are skeptical of whether to invest in the company or not because they are not sure of what might happen to the company since it is locally based in China.
Although Alibaba is a leading company in the e-commerce industry, positioning it as a good investment opportunity, its political risks make it a bad investment. The uncertainty prevents some from buying the stock and makes some sell the stock. Whether the stock price increases or decreases, research the market before buying or selling. You can also check the stock’s financial information and use the Alibaba stock forecast.