NEW YORK (TheStreet) -- Alibaba (BABA - Get Report) is the largest e-commerce company in China but it's been steadily expanding beyond its core business of online retail and tackling all sorts of new ventures. However, it's unclear what the impact will be for investors down the line.

Earlier this month, the e-commerce giant launched an automotive unit and a "smart living" -- or Internet of Things -- division. For a while, it's been investing in entertainment and digital media, even creating its own studio to produce original films and TV shows.

It has invested in a bunch of U.S. startups, including the messaging app Snapchat, ridesharing app Lyft and mobile search provider Quixey. Then there's its huge cloud business, which it recently brought over to California. Don't forget about its health investments.

The list goes on and on, forcing investors to question how these tie back to the core business and whether or not they are cutting into investor returns. Since the start of the year, shares of Alibaba have fallen over 21% versus a 1.1% gain in the S&P 500.

Alibaba is quick to explain how all of these ventures are connected to the company's ultimate strategy.

"Our core business is still, at the end of the day, e-commerce," said Alibaba's vice president of international media, Robert Christie. But "the larger question and objective is what helps solve social problems in China. If you look at entertainment, payments, savings programs, at the end of the day they help regular Chinese people live better lives, and give them access to expand their horizons, become better educated, live a healthier lifestyle. That is what the investment strategy is."

As Wedbush analyst Gil Luria puts it, the definition of e-commerce for Alibaba, and for China, is much more broad than it is in the U.S.

"The way we think about e-commerce is much more strict," Luria said. "In the U.S. we think of it as eBay (EBAY) and Amazon (AMZN). We think of buying travel as a completely separate issue, buying media as a separate issue, buying cars and real estate as being separate than e-commerce, but that doesn't necessarily need to be the case. If you're buying it online, on your phone, it can be e-commerce as far as Alibaba is concerned. They don't need to draw the strict lines we do here."

Even if Alibaba can somehow tie all of its investments into one large umbrella strategy, the financial question remains -- all of these investments cost money but will the return be worth it?

As the past few quarters have shown, this may be a real concern. Margins have been slightly down with Alibaba reporting a non-GAAP Ebitda margin of 58% in the quarter ended Dec. 31, 2014, down from 60% in the quarter a year ago. This is a legitimate concern for investors, Luria said. However, he claims that as long as Alibaba can continue to grow its revenue 40%, which it has been doing, investors stand to benefit down the line.

Ventures including set-top boxes are likely to pay off in the long term, Luria said. The goal here is likely to create more screens on which consumers can shop on Alibaba. It may take a few years but Luria expects a payoff to come eventually.

As for Alibaba's investments in seemingly random startups, those could all be cheap learning experiences for a company that can afford it.

"You have to act like a VC," said Mohanbir Sawhney, a professor at the Kellogg School of Management at Northwestern University. "If you're doing experiments, the best way to learn is to make targeted investments. A minority stake gives you a seat at the table to understand what's going on. It's better if they take minority stakes and learn cheaply rather than buying out company after company. Minority investments are a ticket to learn, and a buyout is a commitment."

That's not to say that aren't still real concerns with some of Alibaba's investments.

Paying about $192 million to buy 50% of a Chinese soccer team is certainly questionable in terms of possible returns for investors. Even the investment in Lyft -- reportedly around $200 million -- brings up some questions for analysts like Morningstar's R.J. Hottovy.

"I prefer to see some of the investments and acquisitions closer to the e-commerce business," Hottovy said. "For them it's exploring all types of growth and obviously e-commerce is a fluid field so it does make sense to look at ancillary business, but only so much as it helps the core business."

Nonetheless, Hottovy isn't too worried about Alibaba, recognizing the company is so enormous it can handle some seemingly less-sensible investments.

"At the end of the day these are pretty small investments, so it's not like the company's breaking the bank," he said. "It's not going to have a huge material impact. But if you do enough it adds up and I think it calls into question management capital allocation. On the surface most of these investments are small enough that the company can absorb it, but you put them together and it starts leading to questions."