BABA Stock: Why Analysts See 50% Gains After Reporting Strong GMV Growth

TLDR

Table of Contents

Alibaba’s 6.18 shopping festival delivered strongest GMV growth in three years at 10% year-over-year
Citi analyst maintains Buy rating with $169 price target, implying nearly 50% upside potential
Company integrates food delivery service Ele.me and travel platform Fliggy into core e-commerce unit
Quick commerce competition intensifies as Taobao Instant Commerce reaches 60 million daily orders
Wall Street consensus remains Strong Buy with 12 analyst Buy ratings and $166 average price target

Alibaba Group continues to make headlines with strong operational performance and strategic restructuring moves that have caught Wall Street’s attention. The Chinese e-commerce giant recently reported its strongest shopping festival results in years while simultaneously announcing a major organizational overhaul.

The company’s 6.18 shopping festival, held from late May to mid-June, saw net GMV on Tmall rise 10% year-over-year. This marked the strongest growth in three years for the platform, which excludes returns and refunds to reflect actual merchant earnings.

Tmall President Liu Bo attributed the success to China’s national trade-in subsidy program. Sales of subsidy-related products surged 115% compared to last year’s 11.11 event. The company also implemented direct price cuts offering instant 10% discounts, which improved user experience and reduced return rates.

Liu emphasized that this year’s focus was on “high-quality growth” over volume. The strategy will continue through upcoming sales events like Double 11 in November.

Citigroup analyst Alicia Yap called the results encouraging and reaffirmed her Buy rating on BABA stock. She maintained her $169 price target, which implies nearly 50% upside from current levels.

Yap believes the strong 6.18 results, combined with solid retail trends in April and May, could push core marketing revenue growth above expectations. She also pointed to promising signs from “Taobao Quick Commerce,” which has started delivering positive results.

AliExpress also gained traction during the festival period. More than 200,000 users joined Pop Mart’s Labubu livestream, with several items selling out instantly in overseas markets including the UK, Canada, Australia, and New Zealand.

Strategic Reorganization Takes Shape

Alibaba announced it is folding its food-delivery service Ele.me and online-travel platform Fliggy into its core e-commerce unit. CEO Eddie Wu Yongming described this as a “strategic upgrade as we evolve from an e-commerce platform into broader consumer-focused platform.”

The reorganization comes as competition intensifies in China’s on-demand delivery and online travel sectors. Rivals like JD.com and Meituan are stepping up efforts in ultrafast deliveries.

Alibaba added a rapid-delivery feature to its shopping platform in April. According to a Taobao WeChat post, Taobao Instant Commerce and Ele.me’s daily order volume surpassed 60 million within two months of the quick commerce feature’s launch.

Meituan announced it is expanding its “instant commerce” feature to include electric devices and fresh food. JD.com revealed it would offer up to three years of zero commission to hotels joining its JD Hotel membership program.

Market Response and Competition Concerns

Research firm Syntun data shows gross merchandise value sales from quick commerce rose 19% year-over-year during the 618 promotion period. However, Nomura analysts express concerns about rising competition intensity.

“We believe it is clear that the intensity of the competition raised by JD has way exceeded the market’s initial expectation,” Nomura analysts wrote. They worry that companies may have spent more on food delivery and quick commerce than expected.

The analysts suggest the market may need to cut earnings views for JD.com in coming weeks. Similar concerns apply to Alibaba and Meituan’s spending on competitive initiatives.

Wall Street Maintains Bullish Outlook

Despite competitive pressures, analysts remain highly bullish on Alibaba’s trajectory. The stock commands a Strong Buy consensus rating on TipRanks with 12 unanimous Buy ratings.

The average price target of $166 implies about 47% upside potential from current levels. This aligns closely with Citi’s individual target of $169.

Ele.me and Fliggy will maintain independent corporate structures while aligning business goals with the e-commerce unit’s strategy. Ele.me was acquired by Alibaba in 2018 and was previously under the group’s local services unit.

According to Wu’s internal letter, the integration marks the company’s evolution into a broader consumer-focused platform. The restructuring aims to streamline operations while maintaining competitive positioning in key growth areas.

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