Yahoo Finance Alibaba (BABA) to Boost AIDC Segment With UEFA EURO Partnership
Alibaba BABA is constantly making efforts to strengthen its Alibaba International Digital Commerce Group (AIDC) offerings. The AIDC segment has been benefiting from the strong performance of platforms, including Lazada, AliExpress, Trendyol and Alibaba.com.
The expanding partner base has been a key catalyst. Alibaba.com recently inked a partnership with UEFA EURO 2024 as the latter’s official international business-to-business (B2B) e-commerce provider.
Alibaba’s international e-commerce retail arm, AliExpress, was also recently named the exclusive global e-commerce partner of UEFA EURO 2024.
As part of the deal, Alibaba.com will launch several initiatives to support small and medium-sized enterprises (SMEs), offering deals, giveaways and advanced sourcing tools to boost sales, particularly for soccer-related merchandise.
Alibaba Group Holding Limited Price and Consensus
Alibaba Group Holding Limited price-consensus-chart | Alibaba Group Holding Limited Quote
Strengthening AIDC Segment Aids Prospects
Alibaba is expected to gain more popularity among SMEs in Europe on the back of the UEFA partnership. Alibaba.com has been taking initiatives to boost its footprint among SMEs. Recently, Alibaba.com introduced the Alibaba Guaranteed platform for global SMEs. The platform simplifies B2B cross-border trade for SMEs by offering supply chain reliability.
In fourth-quarter fiscal 2024, the AIDC segment generated RMB 27.45 billion ($3.8 billion) in revenues, exhibiting year-over-year growth of 45%.
Alibaba is keeping no stone unturned to make AliExpress a success. It created synergies between AliExpress and the cross-border logistics operations of Cainiao to bolster AliExpress’ 5-day and 10-day delivery services. BABA also increased investments in key markets to enhance customer experience, expand consumer base and strengthen AliExpress’ market position globally.
Alibaba Suffers From Stiff Competition
Alibaba has been expanding its footprint in the global e-commerce market through several initiatives including the UEFA partnership and expansion of AliExpress offerings.
The e-commerce market, as per a report from Statista, is anticipated to generate revenues of 4.12 trillion in 2024. The figure is expected to hit $6.48 trillion by 2029, witnessing a CAGR of 9.5% over 2024-2029. This presents a significant growth opportunity for Alibaba.
However, competitive pressure, coupled with rising expenses related to new initiatives, macroeconomic uncertainties and unfavorable foreign exchange fluctuations, poses a serious risk for the company.
Alibaba faces stiff competition from industry peers like Amazon AMZN, eBay EBAY and JD.com JD, which are also making concerted efforts to strengthen their foothold in the global e-commerce market.
Amazon has been at the forefront of the e-commerce market on the back of its strong Prime momentum, robust distribution strength, expanding fulfillment network and growing relationships with third-party sellers.
eBay, on the other hand, is making concerted efforts to support sellers, further solidifying its position in the e-commerce space. Its launch of a mobile consignment concierge, the Luxe Line, to offer a convenient selling experience by allowing visitors in Los Angeles and Las Vegas to directly access expert sellers listing and selling luxury items remains noteworthy.
JD.com expanded its international express delivery service from Guangzhou and Shenzhen to nearly every district in China, boosting its popularity among SMEs. The service offers efficient logistics solutions for various products, including documents and apparel, among others, with the United States, the U.K. and Germany as top destinations.
Conclusion
Alibaba’s shares have returned 1.2% in the year-to-date period, underperforming the industry’s growth of 15.5%. BABA’s shares have underperformed Amazon, eBay and JD.com’s growth of 21.3%, 23% and 4.4%, respectively, in the year-to-date period.
Unfavorable estimate revision reflects rising competitive pressure. The Zacks Consensus Estimate for BABA’s fiscal 2025 earnings is pegged at $8.20 per share, indicating a 4.9% decline from the year-ago reported figure. The figure has decreased by 0.7% in the past 30 days.
The Zacks Consensus Estimate for 2025 total revenues stands at $138.63 billion, indicating year-over-year growth of 6.2%.
Despite stiff competition, Alibaba is benefiting from strong momentum across its international commerce retail business. Solid combined order growth in AIDC’s retail businesses and strength in AliExpress’ Choice are contributing well. Growing international commerce wholesale business, thanks to strength in cross-border-related value-added services, is a tailwind. Expanding China's wholesale commerce business remains a major positive.
Moreover, this Zacks Rank #3 (Hold) company is trading at a significant discount, with a forward 12-month P/E of 9.34X compared with the industry’s 25.25X.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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