Experts address the key questions on Alibaba


Not sure what to make of Alibaba's second-quarter earnings?

The Chinese e-commerce giant painted a confusing picture when it reported its results to Wall Street late Tuesday: While it showed growth in revenue, there was a slide in the value of goods transacted on its platforms. Add in the impact of a slower-growing Chinese economy and a drop in consumer sentiment, as well as offsets from Alibaba's expansions into tech realms including the cloud and online streaming, and the Singles' Day shopping frenzy and it gets hard for the average punter to know what to think.

CNBC has asked the experts all the key questions on Alibaba: earnings, outlook and more. Here, in their own words, are their answers.

Results - good or bad?

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Alibaba Group Executive Chairman Jack Ma.
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I was happy about the topline growth. Because topline growth is very important, you cannot manufacture topline growth. And also the fact that volume may be down, I think that would actually be positive for pricing. I think, revenue's up, volume's down that means pricing is strong. That would not be evident of a slowing economy or slowing growth at all, in my view.
Ivan Feinseth, chief investment officer at Tigress Financial Partners

The stock is where it needs to be now. There was too much hype at the beginning, they were growing at unsustainable rates, then everybody got too discouraged as the growth slowed down. Now as they've stabilized at these 25-30 percent revenue growth, slightly less on earnings growth. They're trading at the mid-20s on earnings. And that's about a fair multiple. They've become more of a clean player. A good, fast-growing company that's tied to the Chinese consumer. So I think they're priced right now for the growth rates that they have.
Gil Luria, managing director at Wedbush Securities

Gross Merchandise Value (GMV) did grow 28 percent and we think this trend will probably continue for the rest of the year. Next year, we have currently low 20s percentage growth rate for them for the full year. But in general ... we think that e-commerce growth will stay. And this is a structural shift from offline to online. Alibaba continues to dominate in that space. And users coming from lower tier cities will help them drive the growth, and in general, in the long term, frequency of shopping and output increase as the quality of life improves will help drive revenue and profitability.
Cynthia Meng, managing director for China and Hong Kong TMT equity research at Jefferies

GMV essentially means total sales but because Alibaba is a pure marketplace player they're only making commission revenue, so really their revenue is only 3-4 percent of the total sales. In this quarter you can see that revenue growth outpaced the GMV growth because the take rate or monetisation rate improved unexpectedly.
Wendy Huang, head of Internet and media research for Asia at Macquarie

Business structure

Jack Ma
ChinaFotoPress | Getty Images

Alibaba is becoming more and more complicated because they are using lots of their cash to buy different businesses: movie entertainment, video, logistics infrastructure as well.

So that actually suggests that they are moving away from light-asset marketplace model to heavy asset-driven model. Especially I think their recent investment in Suning, is endorsing what JD has been doing over the last 10 years.

So JD's advantage is more in logistics. Since two months ago, [Alibaba] has been citing the macro [environment] as reason for their own growth slowdown but I think it's probably just a convenient excuse. The fundamental reason here is still more because of the competition. So they are seeing increasing competition from direct sales platform like JD VIP shop. So over the past four quarters, their GMV growth has been lower than their peers.
Wendy Huang, Macquarie


We think that it is certainly a good opportunity in certain countries and certain markets. But the majority of the growth will come from China, in the areas of lower-tier city expansion, as well as cloud computing. They have a huge opportunity and they are number one, leading in the market and that is also a high margin business for them.
Cynthia Meng, Jefferies

Singles' Day

This year, there should be a lot more international activity. They're trying to really take it global. I doubt they can grow in China as much as they grew last year; they grew more than 60 percent last year, but [I] expect there to be more countries where Single's Day becomes a thing. And people actually start shopping on that day, and Alibaba, for now, at least, owns that concept and should benefit from it.
Gil Luria, Wedbush Securities

Jack Ma - the Sergei Brin of China?

I think that Mark Zuckerberg (Facebook's founder and CEO) and Sergei [Brin, co-founder of Google] are great analogies for Jack Ma. Because he's a very big thinker, he thinks well ahead into the future. And he's active through each one of these acquisitions, transforming his business to where he wants it to be in 10 to 15 years, not just next year.
Gil Luria, Wedbush Securities