Alibaba (BABA) Stock Rallies, Plans to Sell 7% Stake in Meituan-Dianping
NEW YORK (TheStreet) -- Alibaba Group Holding (BABA) - Get Report shares are advancing 2.44% to $81.90 on Monday morning as the e-commerce giant is looking to sell its 7% stake in Chinese technology startup Meituan-Dianping for about $1 billion, the Wall Street Journal reports.
Meituan.com and Dianping Holdings, merged last month to create China's leading online booking and discounts platform, similar to Groupon (GRPN).
Alibaba's move to exit its investment is so that the company can focus more on building a rival food-delivery platform of its own--Koubei, which a joint venture set up in June by Alibaba and Ant Financial, its payments affiliate.
Separately, Alibaba's founder Jack Ma is reportedly looking to buy a stake in the publisher of Hong Kong-based English-language newspaper South China Morning Post, according to Bloomberg.
While discussions are at an advanced stage, financial details of the transaction were undisclosed.
Separately, TheStreet Ratings team rates ALIBABA GROUP HLDG as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
We rate ALIBABA GROUP HLDG (BABA) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- BABA's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 28.45%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- ALIBABA GROUP HLDG reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($16.77 versus $1.59).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 571.9% when compared to the same quarter one year prior, rising from $514.69 million to $3,458.36 million.
- Although BABA's debt-to-equity ratio of 0.28 is very low, it is currently higher than that of the industry average.
- The gross profit margin for ALIBABA GROUP HLDG is currently very high, coming in at 71.73%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 101.46% significantly outperformed against the industry average.
- You can view the full analysis from the report here: BABA