Shares of the Chinese e-commerce giant closed up about 13% on Thursday and were advancing another 2.9% to an all-time high of $146.47 on Friday morning. Alibaba's stock has increased roughly 63% so far this year, vs. the S&P 500's increase of about 9%. At $146 a piece, the stock has more than doubled in value since its initial offering price of $68 in 2014.
Driving the monster gains were comments at the company's investor day from Alibaba Chief Financial Officer Maggie Wu in Hangzhou, China on Thursday, when she predicted that the company's revenue could grow between 45% and 49% in 2018. That's about 12 percentage points higher than consensus estimates for 35% revenue growth.
Alibaba closed out its second day of the investor meeting with comments from co-founder and chairman Jack Ma and executive vice chairman Joe Tsai, where the executives discussed Alibaba's growth strategy and acquisition plans. But perhaps the most striking comments came from Ma, who talked about Alibaba's future as an entire economy, rather than just a business.
While day one of the investor conference was focused on the health of Alibaba's e-commerce platform, analysts said Alibaba used day two of the conference to explain how the company plans to achieve its long term vision. Here's what they had to say:
Piyush Mubayi, Goldman Sachs (Buy, $179 Price Target)
"Core commerce remains the major driver for revenue growth, and is forecast to be driven by higher click volumes and better conversion rates. Despite rising take rates, management expects Alimama's (Alibaba's marketing arm) market-driven model to allow continual achievement of higher ROI."
Mitchell Kim, Maybank Kim Eng (Buy, PT raised to $167 from $150)
"Alibaba's senior management team has shared with investors what they see in each growing businesses, and where will the synergies come from in the long run. The underlying theme is data -- Jack Ma calls this the most important resource today, and similar to electricity centuries ago. Alibaba is hungry for data. They are spending all their effort to gather data from all ends and through that to understand consumption behavior in China."
Aaron Kessler, Raymond James (Strong Buy, $160 PT)
"We were modeling 33% [2018 revenue growth] y/y vs. street at 35% on a local currency basis. For FY17, Alibaba Group revenues increased 56% (~45% excluding acquisitions of Lazada and Youku). Alibaba noted that based on activity of merchants & consumers, technology and integrated business they can achieve that growth."
Hans Chung, Pacific Crest Securities (Buy, $137 PT)
"BABA introduced Brand Databank, a consumer data platform and a foundation of Uni Marketing that helps brands manage and monetize consumer data assets. We believe the key value proposition for brands is to allow them to integrate their own consumer data (CRM, media, offline campaign, etc.) with Alibaba's Uni Identity data across all ecosystems, analyzing and segmenting their consumer base to create integrated marketing with better effectiveness and ROI."
Scott Devitt, Stifel (Buy, PT raised to $165 from $139)
"Alibaba has navigated the transition to mobile well, driving stronger mobile monetization through better customer engagement and higher conversion. The opportunity to leverage consumer data will support continued gains in monetization as evidenced by guidance provided on Day 1. Alibaba will continue to invest in key areas that are likely to expand the addressable market and support long-term growth."
Kerry Rice, Needham (Buy, PT raised to $155 from $140)
"Big data was a key theme. With +500M annual active consumers on Alibaba's platforms consuming content and conducting transactions, the company is able to garner significant intelligence about customers. Leveraging these data insights, Alibaba can ehnance the consumer experience by providing products, services, and content that are personalized to each consumers' preferences. Ultimately, management expects the higher consumer engagement to drive traffic growth and raise conversion, compelling merchants and brands to allocate more of their marketing spend to Alibaba's platforms."
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