Alibaba’s First Public Year: The Highs, The Lows

[vc_row full_width=”” parallax=”” parallax_image=””][vc_column width=”1/1″][vc_column_text css_animation=””]“I’ve been thinking about the next five or ten years and how I can make sure these shareholders be happy. The very important thing is to make these guys happy. If they are successful, we’ll all be happy. That’s what I believe.”

Those words were uttered by Alibaba Chairman Jack Ma on Sept. 19, 2014 — the day Alibaba posted its record-breaking $25 billion debut into the world of publicly traded companies.

At $68/share, Alibaba was the new, shiny penny on Wall Street. Everyone wanted a piece of the eCommerce giant, and those who didn’t see the value in Alibaba pre-IPO were probably kicking themselves at the time.

What a difference a year can make.

Make no mistake, Alibaba is still very much an eCommerce powerhouse, enjoys a massive mobile commerce boost quarter after quarter, has expanded cross-border commerce in a way no other company has and has continued to make a name for itself as an investment giant for companies and products that touch nearly everything in the commerce, tech, payments — and even entertainment — industries.

But, there’s a “but” – as is often the case with massively growing eCommerce giants. Its successes have been muddled by a year accompanied by critics, regulatory woes and many analysts who’ve been quick to throw daggers at any misstep Alibaba made.

While some of the criticism must be taken with a grain of salt, its stock price tells a different story. The IPO price was $68/share and peaked at $119.15 on Nov. 10, 2014. Last week, it dipped to $60/share and has been teetering in the $65–67/share range for most of the week.

Now, we’re not going to get into stock analysis, since there’s plenty of other analysts in the market that have made their perspectives known. Instead, PYMNTS decided to take a look back into the past year and focus on Alibaba’s highs, and its lows, to more fully illustrate the power of the Alibaba ecosystem and how that has changed in its first year of being a public company on the Street.

Five High Points Of Alibaba’s First Public Year

Record-Setting IPO

We can’t talk the best of Alibaba without reiterating Alibaba’s record-setting $25 billion IPO. On Sept. 20, the day after Ma celebrated his successful debut into Wall Street, PYMNTS reported that the influx of new capital gave the China-based eCommerce specialist a $247 billion market valuation. By comparison, Amazon at the time was valued at $150 billion. Alibaba’s stock closed its first week at $93.89/share.

Singles’ Day Sets Single Day Sales Record

Alibaba’s other major milestone was the success of its own retail holiday, Singles’ Day, which happens every Nov. 11. With sales hitting more than $2 billion in the first hour alone, when the day was done, the total tally was $9.3 billion, up significantly from the $6 billion it scored in 2013. And, all of this together turned Jack Ma from China’s richest man to one of Asia’s richest men over the course of the year.

Alibaba’s Cross-Border eCommerce Push

Google “Alibaba” and “Cross-Border Commerce,” and you’ll be overwhelmed with results. Just this week, the logistics affiliate of Alibaba, Cainiao, announced it was working with the United States Postal Service to help accelerate delivery speeds for merchandise ordered by U.S. consumers via the Chinese eCommerce giant’s online shopping sites. Alibaba, however, has been growing its cross-border commerce relationships with international retailers (like a major German retailer) to spark cross-border commerce — in, and outside of, its homeland of China.

Alibaba’s Unmatched Mobile Commerce Momentum

Alibaba hit 307 million monthly active users in this year’s Q1 alone on its mobile commerce apps. To put that into perspective, that’s an 18 million user increase from Alibaba’s March quarter and a whopping 63 percent year-over-year increase. Mobile revenue also hit another noteworthy increase, soaring to roughly $1.25 billion (RMB 8 billion), or a 225 percent increase, YOY. Mobile revenue accounted for 51 percent of Alibaba’s China commerce retail revenue in the quarter, and the mobile monetization rate jumped 2.16 percent in the quarter. Mobile GMV hit $60 billion and now accounts for 55 percent of total GMV. Alibaba’s financial arm, Alipay, has also seen strong growth. In fact, 78 percent of transactions on Alibaba’s China commerce retail marketplace are paid through Alipay.

Investments In Rural China And Logistics Growth

Prior to Alibaba’s big investment in logistics, the concept of eCommerce in rural China was virtually an untapped market — slow, unreliable delivery, goods never showing up. Those were many of the pain points that caused a lag in the Chinese eCommerce market. Alibaba found a way to capitalize on this much-needed market, helped farmers promote their goods outside of rural China and facilitated bringing more goods in — and in a more efficient and affordable manner. Alibaba’s logistical investments, if all goes as planned, may help scale that ambition through its recent investments in the country’s logistics side. This includes investing 10 billion yuan (about $1.7 billion) into distribution centers all over China in the next 3–5 years.

Five Low Points Of Alibaba’s First Public Year

The Stock Story Saga

What a difference a year makes. Now, when people look up Alibaba’s stock price, it’s to see if it dipped — not how, if or how much it spiked. It didn’t help matters when the Barron’s story about how low its analysts thought Alibaba could go tore through the financial market headlines like Alibaba was folding. Being called out for things like, “Alibaba’s financial reports have broken free of verifiable reality,” certainly didn’t help. Alibaba was quick to respond to an article that it said “lacks three key ingredients — integrity, professionalism and fair play.” But, as Alibaba has learned in the past year, those attacks come with the territory of being one of the hottest eCommerce tech stocks of the past year.

Fake Good Accusations Hit Home

Multiple times in the past year, there were reports about accusations of Alibaba’s marketplaces being a haven for fake goods. The first reports came in February when Alibaba got tangled in the counterfeit web of accusations. Alibaba wasn’t accused of selling counterfeit goods itself; its marketplaces are designed for third-party merchants to sell to customers. An SAIC report described the issue as Alibaba’s “biggest credibility crisis since it was founded.” In the case of the Chinese regulators going after eCommerce sites like Alibaba and JD.com, it stems from claims that the company was committing illegal business practices in regards to fake merchandise and manipulative pricing. By May of this year, Alibaba was fighting off another legal battle from luxury goods brands.

Alibaba Folds Its US-Based Competitor

In March 2014 — before Alibaba was a publicly traded company — the eCommerce giant put its big toe in the U.S. eCommerce market waters with the rollout of 11 Main. Less than a year and a half later, Alibaba folded its U.S.-based Amazon competitor into a New York-based social shopping site called OpenSky. The deal involved folding 11 Main into OpenSky and parts of Auctiva, Vendio and SingleFeed — other Alibaba-owned U.S. companies. This leaves 11 Main closing up its virtual doors as a standalone site. While Alibaba kicked off its IPO with conversations about U.S. expansion plans, it was quickly realized that that ambition may have been too far-fetched — even for the rate of Alibaba’s growth at the time.

Alibaba’s Slump Became Amazon’s Gain

China’s economic slowdown finally took its toll on the country’s top eCommerce company — putting Amazon back on top as the most valuable eCommerce marketplace. While Amazon has a market value of more than $240 billion, Alibaba dipped down to a value of about $180 billion in August. Alibaba had taken that top spot away from Amazon when it had its record-setting IPO, but it has since dipped more than 30 percent from its high point in November. Alibaba’s earnings gave a bit of insight into the slowdown — caused in large part by the economic downturn that has China’s currency being devalued and consumers spending less. While a slowing Chinese economy has turned out to be hard on steelmakers and auto manufacturers, it is a shaping up to be a drag on the heretofore always expanding Alibaba Group.

Alibaba Exec Detained In China

In January, Alibaba found its name and one its executive’s names in headlines about bribery accusations that may very well have nothing to do with Alibaba. Either way, it wasn’t good for public image. In early January, Chinese authorities arrested half a dozen former employees of Tencent and an Alibaba executive who was detained on charges of corruption and bribery. The alleged misconduct occurred when current Alibaba executive Patrick Liu headed Tencent’s online video unit. Liu, along with the other former Tencent employees, left the company in 2013. Alibaba denied any connection to the case, but having to defend its executive didn’t exactly help its crusade against the other bribery and counterfeit accusations.

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