1. Alibaba Group Holding Ltd.
NYSE: BABA
Vivek Vinayak Patrick Leake

2. Company History
1999: Alibaba is founded by 18 founders, including Jack Ma
2000: Raises US $25 MM from Softbank, GS, Fidelity, etc.
2002: Becomes profitable
2003: Taobao created C2C (eBay and Amazon)
2004: Alipay is launched – online payment system (PayPal)
2005: Yahoo invests $1 billion in cash for 40% stake in Alibaba
2009: Alibaba Cloud Computing is established
2010: Taobao Mall, or Tmall launches (Amazon).
2014: Alibaba IPO – largest global IPO
Anthony Li

3. Timeline - Anthony

4. How big is Alibaba?
“In 2013, two of Alibaba’s websites handled $240 billion in sales.” 2x Amazon, 3x eBay
Alibaba accounts for 60% of packages delivered in China
80% of China’s e-commerce
“Alibaba’s Taobao is one of the 20 most-visited websites globally.”
Anticipated to handle $1 trillion a year in transactions in 2018
Anthony

5. Anthony

6. Revenue Sources Marketing services to merchants on its marketplaces:
Alibaba’s online platform bid for specific keywords, which upon being typed in a browser, display product listings.
Alibaba charges the sellers on a cost-per-click basis and offers this service on its own platform, as well as third- party affiliates. 
The company also charges sellers on a cost-per-thousand impressions basis in exchange for an attractive display position on its platform (one of its marketplaces) or with third-party affiliates.
Transaction fees; primarily from Tmall and Juhuasuan
 Sellers pay a certain transaction fee to Alibaba for goods that are sold through Alibaba. This fee typically ranges between 0.3% to 5% of gross merchandise volume.
Alibaba offers premium subscriptions and value-added services.
Cloud services, Alipay, Subscription Video & Music, etc……
Revenue sources - Neil

7. Business Segmentation
Descriptions
Revenue Sources
Rev. Contr.
China e-commerce retail
78%
Taobao Marketplace
Largest C2C online and mobile shopping marketplace in China. eBay and Amazon.
P4P or display marketing fees; subscriptions fees for storefront software
Tmall
Largest B2C online and mobile platform for brands and retailers in China. Amazon.
P4P or display marketing fee; commissions based on percentage of MV; annual upfront services fees
Juhuasuan
Daily deal sites that leverages Taobao Marketplace. Groupon.
Placement fees for promotional slots; commissions based on percentage of GMV
China e-commerce wholesale 5%
1688.com
B2B, online wholesale marketplace in China.
Fees from memberships and value-added services; P4P and keyword bidding marketing fees
Int’l e-commerce retail 7%
Alibaba.com
Leading global wholesale platform focusing on export trades between suppliers in China and buyers globally
Fees from membership and value-added services; P4P marketing fees
Business Seg - Neil

8. Investment Thesis Recommendation
Ridiculous Growth & aggressive management
Great fundamentals & balance sheet for high-growth company
China’s growing middle class in a growing economy
Recommendation
Purchase shares before earnings report (1/29)
Hold period: 6 to 12 months
Exit: If it trades below IPO price ($92) – Political and interest rate risk
Sell: $120
Neil
Buy before 2nd earning reports since IPO because of single’s Day (11/10) and holiday season.
Exit if it trades below the IPO price, ($92). Political risk and shell company
Hold period: 6 to 12 months – portfolio age, rate hikes impacts and voliatility
Sell at 120

9. Profit?
Neil

10. Price Chart Jan 21. Closing Price: 103.29
52 week Range: –
Neil

11. Competitor Comparison
Neil

12. China Growth Potential
Online Shipping RMB 128 Million (2008) to RMB 1.9 Trillion (2013) to RMB 5.6 Trillion (2017)
Consumption is 36% of GDP (US is 67%)
Growing mobile internet penetration, smartphone usae and tablets, and improving wireless telecommunication infrastructure in China.
Food and beverages, health goods, and medical services are under-penetrated in online retailing.
Anthony

13. Alibaba’s Chinese Dominance
Growth Potential Anthony

14. China’s E-commerce PotentialUS
Consumption % of GDP
36%
67%
Internet Penetration
46%
82%
Online Shopper Penetration
49%
64%
Growth Potential Anthony