- An investment into Alibaba at the close of its first day of public trading would have increased in value by about 90 percent as of Aug. 6, 2018, according to CNBC calculations.
- Analysts expressed optimism about the Chinese tech giant's prospects, but they warned it is not immune to a sudden negative turn in market sentiment about China's economy.
Alibaba is one of the most prominent Chinese technology names around the world and has a market value of about $463 billion. So far this year, its stock price has risen about 3.6 percent with shares hitting highs in June.
If you invested in Alibaba four years ago when it made headlines as the then-biggest initial public offering ever, you'd have made some decent returns. According to CNBC calculations, a $1,000 investment made at the closing price on Sept. 19, 2014 would be worth about $1,902.43 as of Monday, Aug. 6.
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That is approximately a 90.24 percent jump in value from the closing price on the first day of trading. Alibaba doesn't pay any dividends.
Consumer-facing technology companies have been on a roll over the last few years due to rapid technology developments and a growing number of people using their services. For example, Facebook reported it has 2.23 billion monthly active users as of June 30, 2018. Apple, which boasts a prominent hardware business that makes smartphones, computers and tablets, reached a historic $1 trillion market value milestone last week.
In comparison, a $1,000 investment into Amazon over the same period would have been worth about $5,576.93 on Monday. Meanwhile, a similar investment into Apple would be worth $2,070.82 as of Monday. (If you made a decade-long investment in the iPhone-maker, however, it would be worth more than $9,222.50 as of last week.)
To be clear, those stocks' past performance does not mean their futures will hold similar results.
Alibaba, for its part, has become a mainstay in the tech world since Jack Ma co-founded the company from his apartment in Hangzhou, China nearly two decades ago. It runs massive e-commerce, payments, cloud computing and entertainment businesses, and it invests globally in research and development into cutting-edge fields like artificial intelligence.
Alibaba represents a "compelling investment in the Chinese consumer as the Chinese economy becomes ever more focused on consumption growth," Gil Luria, director of research at D.A. Davidson, told CNBC.
The company is "not only the leader in Chinese e-commerce, but is also rapidly expanding into adjacent categories within Chinese internet as well as new international markets," Luria said, adding that such moves should be enough for Alibaba to see more than 30 percent growth over the next few years.
One such category where Alibaba has stepped up its efforts is in blending online and offline shopping. As part of its "new retail" strategy, Alibaba launched a series of outlets called Hema stores where customers can shop, dine and order groceries for delivery from their mobile phones — all while using the Alipay system to make payments.
Last week, Alibaba also announced a partnership between food delivery arm Ele.me and Starbucks to deliver beverages and snacks.
A key international investment for Alibaba had been into Southeast Asian online retailer Lazada. As of March 2018, Alibaba ponied up a total of $4 billion for an 83 percent stake in the company, which has operations in Indonesia, Malaysia, the Philippines, Thailand, Vietnam and Singapore. Southeast Asia is a lucrative market for e-commerce as millions of first-generation internet users embrace online shopping.
Still, analysts cautioned that Alibaba's stock price is not immune to a negative turn in the market sentiment toward China, the depreciation of the Chinese yuan and a slowdown in the world's second largest economy.
"BABA is still the best e-commerce stock in terms of fundamentals," Junheng Li, head of research at JL Warren Capital, told CNBC, referring to Alibaba's stock symbol. Over the last two years, she explained, investors have been buying Alibaba shares as a way to get a piece of Chinese economic growth, but some are now betting against the company to hedge against China risk.
Since a majority of Alibaba's value relies on e-commerce, discretionary spending is key for the company's second-half earnings, she said. Given that, her firm is "incrementally cautious" on the company because of China's growing household debt, Li added.
D.A. Davidson's Luria added that the ongoing trade conflict with the United States could cause the Chinese economy to slow down.
"If this conflict persists and exports from China to the U.S. diminish, the Chinese economy could slow, dampening consumption and thus putting Alibaba's core business at risk," Luria said.