Alibaba Lower After Acquisition and Strategic Plans

Alibaba failed to perform well in the market on Monday after its consecutive announcement of acquisition and investment plan over the weekend.

Alibaba and Bona Films

After the Chinese e-commerce juggernaut defeated Walmart as the leading retailer globally, Alibaba confirmed that it has taken more than 8 percent stake in Bona Films prior to the privatization of the Chinese film company to boost the development of the country’s film and television industry.

According to Alibaba Pictures Chief Executive Zhang Qiang, the Alibaba pictures wanted to make an ecosystem and platform covering the whole value chain of the film and TV industry which correlates with the mission and vision of Bona.

Prior to the bet of Alibaba on Bona Films, it invested in Tom Cruise’s infamous movie series Mission Impossible: Rogue Nation. Afterwards, Alibaba made a partnership with Paramount Pictures on the advertisement and promotion of the said movie in China.

Last year, Alibaba had a $4.2 billion worth of purchasing transaction with one of the biggest video sites in China, Youku Tudou. It was followed by its acquisition by one of the film and TV production giants in China Enlight.

Additionally,  Alibaba Pictures is on set to collaborate with David Ellison’s Skydance media to provide the financial needs of the first original movie to be featured internationally. The recent activities of the e-commerce giant is believed to be a clear indication of its growing interest in the entertainment business.

Alibaba and Mondelez International

Aside from financing Bona, Alibaba sealed a strategic business deal with American based multinational confectionery and beverage conglomerate company. Mondolex International announced that Alibaba Group would be its official partner in bringing its brands to the Chinese consumers through the e-commerce online marketplace.

Based on the statement released by Tim Cofer, chief growth officer of Mondolez, the capability of Alibaba to bring its brands to the Chinese consumers was what captured them. He said that snacking is a fast growing sector fro the e-commerce market in China and Alibaba is a powerful partner to help us capture our share of that growth by expanding our distribution channels and improving their brands accessibility in both rural and urban Chinese markets.

Jet Jing, Vice President of Alibaba Group, expressed his excitement towards the new strategic plan of the company . He commented that they want to help the American food and beverage company to utilize their e-commerce ecosystem and technology infrastructure to successfully build their brands and effectively reach the active buyers on their China retail marketplaces.

It was disclosed that the two companies will work together on branding and advertising solutions, consumer insight, product innovation, expansion of sales, cloud computing and distribution channels. Brands including Toblerone, Cadbury, belVita and Oreo will be available soon on the platform of Alibaba.

Alibaba Shares Fell

Shares of Alibaba changed hands lower at $77.50, a decline of 0.14 percent or 0.11 points with a market capitalization of $194.36 billion. The stock had an intraday high of 78.76 and an intraday low of 76.62  Currently, the price earnings ratio of the stock is 18.68.

The Chinese e-commerce has a 50-day moving average price of $73.72 and a 200-day moving average price of $73.91. Its 52-week low was at $57.20 and a 52-week high of $95.06. Alibaba has an average rating of Buy and a consensus price objective of $93.09.

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Alibaba shares edge higher, declares buying activities

Alibaba edged higher in the trading session earlier by 8.88 percent to $66.30, an increase of 5.41. The biggest Chinese e-commerce company has a market capitalization of 169.4 billion Chinese yuan. The stock opened at $64.42 with a session low of $64.04 and session high of $66.89.

Around 21,735, 387 shares of the company were traded on the session while its price earnings ratio is 16.26. The company has a one-year low of $57.20 and its one-year high is $95.06. Currently, the stock has a 500-day moving average price of $69.55 and a 200-day moving average price of $73.06.

The e-commerce company gained $5.33 billion as reported from their quarterly earnings report beating the expected revenue of the analysts of $5.02 billion. Similarly, the firm surpassed the expected earnings per share of the analyst when it disclosed $0.98 EPS for the said quarter.

Alibaba gained an average rating of Buy from thirty eight analysts while its average objective price is $93.92. On the other hand, ICON Advisers purchased 5,1000 shares of the company which gave the institutional investor a total of $1,215,000 worth of shares.  Other hedge funds raised their positions in the e-commerce company as well. For the fourth quarter, Private Asset Management, Diwa SB Investments and River & Mercantile Asset Management are just some of the investors which boosted their respective positions in Alibaba Group Holding.

Alibaba surprised the market when it announced its buying activities recently. The company confirmed that it has bought 32.9 million shares of Groupon which created an anticipation for a possible full acquisition in the long run.

According to the filing extracted from the Securities and Exchange Commission, the Chinese e-commerce giant bought a total of $101 million shares to Groupon or around 5.6 percent stake.

“We bought a very small minority stake in Groupon in order to share ideas between U.S. and China markets. This is a passive holding and if Groupon management would like to exchange experiences with us, we are prepared to share,” the spokesperson of Alibaba said.

“Alibaba has a reputation as a long-term holder, and we’re pleased that they take the same view of Groupon’s opportunity and execution as we do,” Groupon told the media.

 

A market analyst explained that this might be one of the strategic plans of Alibaba to slowly extend its market in the United States. He mentioned that the Chinese e-commerce company doesn’t want to have their own operations, so they are investing in other companies to help them learn and pave the way for more robust activity down the road. Alibaba has acquired stakes from Magic Leap, Jet.com and Lyft as well.

Meanwhile, as the news spread regarding the matter, the shares of Groupon edged higher about 40 percent after its recent jump of 30 percent. The U.S. based global e-commerce marketplace has a market capitalization of $2.3 billion and focuses more on its travel section and keep its traditional online shopping platform. It has slowly climbed after the drastic drop of 60 percent the previous year.

In other news, Temasek Holdings Pte has tied up with Alibaba as part of its plan to widen the investment of the company in the industries serving the middle class and on the illustrious technology of China. The Investment firm traded about 548, 769 American Depository Receipts of Alibaba. Temasek has bought $50 million of Alibaba’s shares on March 2011.

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Oil Climbs on U.S. Stock Draws as Demand Forecast Gains

On Thursday, oil prices climb as lower U.S. crude stocks and optimistic global demand forecast concerns regarding the glut of supply, while threat on China’s budget continues to be evaluated.

Energy Information Administration resulted data on Wednesday that U.S. stockpiles of gasoline and crude declined 1.7 million barrels last week, boosting sentiment in the U.S. market.

Brent crude oil traded at $50.26 per barrel which rose 60 cents when it closed on Wednesday. As for U.S. crude, it traded at $43.50 per barrel which was also up 20 cents.

According to the International Energy Agency, the global demand for crude oil this year was seen as the strongest in five years. EIA also mentioned that global oversupply could extend until 2016.

China’s demand for oil dropped in July due to the sudden plunge of sales which could affect the further development for this year.

In July, China consumed approximately 10.12 million barrels of oil per day which was 4% down since June. Last year, surplus of oil gained 9.72 million barrel per day.

Chinese automobile sales have declined 7.1% in July 2014 for four consecutive months, which was the steepest drop since February 2013.

China’s currency slightly gained after the worst two-day depreciation. However, the central bank moved to stem a sudden selloff that witnessed the currency lose 4% in just two days.

Brent futures forecast a rate of $54.61 per barrel this year and $60.48 per barrel for next year, while WTI crude is expected at $49.31 per barrel this year and $54.50 per barrel next year.

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