Alibaba is surging after posting double-digit quarterly revenue growth early Thursday. This is just the beginning of its growth, according to one trader.
- Alibaba is one of the biggest companies in the world, with a market cap of nearly $500 billion, but because it has its hands in so many businesses it can be hard for investors to understand its potential.
- It is a major player in everything from business to business sales, online shopping and payments, the next generation of brick-and-mortar stores and even cloud computing. But, when you strip away its financials, the company makes all of its profits from its core commerce businesses.
- It has been able to produce stellar results growing revenue 61 percent on a year-over-year basis and increasing free cash flow by more than 400 percent in the past 4 years.
- The stock has sold off on recent concerns about U.S.-China trade tensions and if relations continue to sour between the two largest economies in the world, Alibaba may feel more downside heat in the near term.
- Alibaba is ultimately a bet on the growth of the Chinese middle class, and with its massively dominant position in the world's most populous economy, it is one of the purest long-term bets on global growth in a consumer market that still has many years of double-digit gains ahead of it.
- The stock has fallen below the $200-per-share mark on U.S.-China concerns, and if it slips toward $150 on any disappointing earnings news, it would offer a great buying opportunity for investors with a three- to five-year horizon.
Bottom line: Alibaba may be under pressure right now, but its future looks bright.