Alibaba.com institution or retail rally?

BUY OR SELL-Alibaba.com: Web's rich pick or fool's gold?

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Thu Jan 20, 2011 4:32am EST

On Wednesday, Alibaba Group said it will invest up to $4.5 billion into developing China's logistics industry together with financing partners in a booming e-commerce industry.

China's e-commerce transaction value grew 33.5 percent to 4.8 trillion yuan in 2010 and is expected to grow to 20.4 trillion yuan by 2014, according to data from iResearch.

The strong rally in Alibaba.com shares so far this year has been partly fuelled by talk that Alibaba Group might make an investment in Sina's hot microblog Weibo, Wei said. But he added there were also fundamental factors, such as Ali Loan.

An Alibaba spokesman declined to comment on market rumours.

Last October, Alibaba.com shares rose on market talk that Yahoo may be bought out by a private equity and U.S. media firm consortium. However those rumours have dampened after Yahoo said it was not interested in selling its stake in the company.

A senior Alibaba Group executive declined to comment on Wednesday about the current situation. "It's pretty much a deadlock, I don't think the market is looking into that," Wei said.


STILL A NET-ADDS FIRM

In November, Alibaba.com said it expects a potential slowdown in the export sector and together with the new higher service fees, this could lead some users to balk when their subscriptions come up for renewal.

"Their growth has slowed down a little bit because of the slowdown in new subscribers and I think the market has been very worried about that for a while," said Benjamin Tam, a portfolio manager with Investors Group based in Hong Kong.

Alibaba.com said its paying members rose a modest 5.3 percent from the preceding quarter to 750,937 and it flagged slower growth of members in recent months. It also said it would try to counter the impact of the slowdown by selling more services to existing members.

"The institutionals are not getting involved and we think this is more of a retail rally...This is still a net-adds (additions) business and we estimate that net adds will remain flat this year in terms of absolute number for 2011," said Nomura analyst Jin Yoon.

"We think the recent rally is a bit overdone," he said. (Editing by Anshuman Daga) ([e-mail]; [phone]; Reuters Messaging: [e-mail]))