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[Company news]How Alibaba's Business Model Transcends Amazon, Facebook, Google

More Posted time:Jul 4, 2016 16:07 PM
How Alibaba's Business Model Transcends Amazon, Facebook, Google

The breadth of Alibaba's ecosystems surpasses that of Alphabet, Amazon or Facebook, says a bullish analyst. Above is Alibaba's headquarters. (Danielinblue)
Aibaba (BABA) has evolved into a digital marketing powerhouse that integrates e-commerce, digital media, entertainment, analytics and other company assets in a manner unmatched by its various competitors, says Morgan Stanley.
It's that observation that led Morgan Stanley analyst Robert Lin to boost his  price target on Alibaba stock by 9%, to 130 from 119.

Also spurring the update is the view that Alibaba's cloud computing platform is poised for strong growth in the years ahead, similar to that of Amazon Web Services, the cloud computing platform of (AMZN).

Alibaba stock was up 2.5%, near 78, in late-afternoon trading in the stock market today, regaining its 50-day line.

Alibaba's integrated ecosystem connects and controls the whole value chain of branding, broadcasting, sales conversion and sharing, Lin wrote in a research report Tuesday. That's very different from how it works in the U.S., where internet giants such as Amazon, Facebook (FB) and Alphabet (GOOGL) are individually dominant in certain parts of the value chain but not in the complete manner that Alibaba has achieved, Lin said.

"None has an ecosystem that connects the entire marketing and commerce value chain from branding, broadcasting and sales conversion. Alibaba connects the entire value chain," Lin wrote.

Alibaba Unified Identification Is Its Secret Sauce

Alibaba has developed a unified identification for all its users that track and match them across different apps, including their behaviors on different mobile devices. This includes the ability to track users in various categories, including location, demographics, gender, age, education and spending power. This is supplemented by data from its social media platforms and purchasing behavior.

"Since 2009, senior management has set a goal of transforming Alibaba into a data company," he wrote. "Its data ecosystem is built to collect, process and utilize all types of user data to improve the customer experience and facilitate commerce."

In the last two years, Lin wrote, Alibaba has also successfully become a mobile commerce company, encompassing digital commerce, media and entertainment. "The foundation is set to transform Alibaba into a leading data commerce company that also leverages its Big Data, analytics and cloud computing platforms," he said.

Alibaba also has Ant Financial, a company affiliate that has evolved from a leading payment solution provider to a financial technology company that offers a broad range of services including wealth management, financing, insurance and credit references -- all of which leverage its Big Data capabilities, Lin said.

Alibaba has been positioned to become a data company since the inception of AliCloud, its cloud computing unit launched in 2009, Lin wrote.

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