Alibaba Stock Value Highly Probable to Trillion Dollars by 2025

    Alibaba Stock Value Highly Probable to Trillion Dollars by 2025  The Chinese tech giant is on the right track to join the 12-zero club. Alibaba 9988 (HKG) HK$167,90 +6,90 (+%4,29), China's largest e-commerce and cloud infrastructure company, had a market capitalization of $231 billion, up 38% on its first trading day when its stock price was first offered to the public in September 2014. Last October, Alibaba's share price hit a record $319, with a market cap of nearly $850 billion. Thus, Alibaba has gained the appearance of being the first trillion-dollar Chinese technology company. After reaching these levels, it declined and its valuation decreased to approximately 460 billion dollars. Let's examine together the reason why Alibaba's stock has dropped and whether it can reach $1 trillion again by 2025.

What has Alibaba encountered?

This sharp decline began last December with an antitrust investigation into China's State Market Regulatory Administration's e-commerce business. As a result of the fine, Alibaba successfully paid the 18.23 billion yuan ($2.82 billion) fine, which corresponds to 12% of its net income in 2021, in the fourth quarter of the same year. In addition, the Chinese government suspended Ant Group's IPO last November by Jack Ma, the founder of Ant and former CEO of Alibaba. In the face of these consecutive blows, the company profited from its IPO, which owns one-third of Ant and uses the Alipay platform to facilitate its customers' online transactions.

Could Alibaba still be a $1 trillion company?

Although Alibaba has experienced some serious setbacks over the past year, its core businesses are still growing. In fiscal 2021, both revenue increased and adjusted net income (after penalty paid) increased.

Alibaba Stock Value Highly Probable to Trillion Dollars by 2025

  In addition, Cloud computing revenue rosed by 50%, increasing core trade revenue by 42%. Today, Alibaba's shares are trading at 20 times this year's earnings and three times this year's sales. But if Alibaba meets analysts' expectations in the next two years, it could be worth around $750 billion by early 2025 if the Price-to-sell ratio remains steady. But if regulatory headwinds subside and Alibaba orders higher valuations again, its market cap could exceed $1 trillion by 2025.

Conclusion

Investors willing to tackle all short-term challenges could potentially own part of a $1 trillion company by 2025, but it can be a bumpy ride.  

Source: The Motley Fool

 

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