Why Alibaba Group Holding Ltd. Shares Doubled in 2017
Shares of Alibaba Group (NYSE: BABA) nearly doubled in 2017, gaining 96.4% according to data from S&P Global Market Intelligence. The China-based e-commerce giant crushed analyst estimates in three of last year's four earnings reports -- and made up for the fourth miss with an impressive investor conference just a couple of weeks later.
That conference in early June actually provided Alibaba's biggest single-day jump of the year. Share prices rose as much as 13% on June 8, following a thorough presentation of Alibaba's current business and future plans. The event also triggered a 10% jump in Altaba (NASDAQ: AABA) shares, which makes sense because that stock is essentially a proxy for owning Alibaba itself.
Heading into the June event, analysts had been expecting roughly 30% revenue growth in fiscal year 2017. At the investor day, Alibaba founder and chairman Jack Ma made it clear that he's aiming for something closer to 47% growth. The company's established operations in managing online stores and their back-end product delivery processes are driving most of that enormous sales growth, and Ma hopes to exceed a cool $1 trillion in online sales managed in fiscal year 2020. On top of that, the company is running a successful collection of other high-growth businesses such as a cloud computing platform, some digital media delivery services, and Chinese-language entertainment productions.
With a $487 billion market cap, Alibaba is already one of the world's largest businesses. That ambitious trillion-dollar goal for online transaction totals sets the stock up for a few more years of continued hyper-growth -- but Jack Ma needs to deliver on that promise.
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Anders Bylund owns shares of Alibaba. The Motley Fool recommends Altaba Inc. The Motley Fool has a disclosure policy.