From Morningstar: 2024-06-02 20:26:00

Alibaba released its fiscal fourth-quarter earnings report, with Morningstar giving the stock a 3-star rating and a fair value estimate of $96. The economic moat rating remains wide despite increasing competition, and the company is in sound financial health with CNY 572 billion in cash as of September 2023.

In the quarter, Alibaba’s gross merchandise value saw double-digit growth as it prioritizes customers and improves the shipping experience. Despite a 5% adjusted EBITA decline, the company focuses on market share gain over profitability. Management plans to increase the take rate in the future and expects customer management revenue growth to align with GMV growth.

The fair value estimate for Alibaba’s stock is $96 per share, with the ratio of GMV to retail sales of consumer goods expected to decrease over the coming decade. Despite intense competition, Alibaba’s economic moat remains wide due to its strong network effect and profitable e-commerce operations for the past decade.

Alibaba faces very high uncertainty, with intense competition in China’s e-commerce landscape. Pinduoduo has shown faster growth than Alibaba, while JD.com and Tencent are also strong competitors. The company must navigate these challenges while maintaining financial strength and market leadership.



Read more at Morningstar: After Earnings, Is Alibaba Stock a Buy, Sell, or…