Ant Group's History Making IPO Creates BABA Opportunity
Jack Ma's Ant Group just announced the biggest IPO in public equity market history, and it won't even be listed on US exchanges. These shares will be hitting the public exchanges in Hong Kong & Shanghai on November 5th. Ant's investment bankers' book of interest is full to the brim with eager institutions wanting a part of this fintech powerhouse, having had to close its Hong Kong books early because of this enormous demand.
Despite Ant Group not being available on US exchanges, domestic investors can still benefit from its overzealous market interest through Alibaba (BABA), which has a 33% ownership of this financial technology behemoth.
Ant Group is set to raise a minimum of $34.5 billion in its dual exchange offering (Shanghai and Hong Kong) that would value this fintech powerhouse at $313 billion, making it the largest public listing in history and the world's most valuable fintech enterprise.
Alipay, the brand's consumer finance app, has 1.3 billion users (as of March), almost quadrupling PayPal's (PYPL) current user base, and has an equivalent level of annual transaction volume to Visa (V) and Mastercard (MA) combined. Ant Financial offers a comprehensive financial services portfolio, including loans, wealth management, insurance, and enterprise services.
Ant Group is the shining star in Asia's financial universe and reflects its value on affiliate Alibaba's share price.
Ant represents roughly $38 of every BABA share (at a valuation of $313 billion), and its continued growth strengthens Alibaba's already firm grip on the rapidly digitalizing Chinese economy.
Alibaba has a cornucopia of digital products at its disposal, and it will use all of them to control and profit off the prolific digitalization occurring in Asia today.
The fact that the Amazon (AMZN) of the East (aka BABA) has not taken off to the extent of its western counterpart is baffling. Alibaba controls the e-commerce space (80% market share), the cloud-computing category (roughly 50% market share), and a 33% stake in the leading FinTech in the most populous and soon-to-be largest economy on earth.
Alibaba is valued at less than half of Amazon despite producing substantially wider margins, greater profitability, and having a more extensive topline growth outlook for the next couple of years.
This stock still has a massive amount of upside potential, just waiting to be priced in. The Chinese economy is beginning the recover past pre-COVID growth rates, with Alibaba's digital technology being the centerpiece to this expansion.
What To Watch For
November 5th is a huge day for this Asian tech conglomerate, with its fintech arm, Ant Group, debuting its shares in the largest public equity offering in history and its September quarter results being released before the bell.
According to Zacks Consensus estimates, the Street is anticipating an EPS of $2.07 on sales of $22.91 billion, which would represent growth of 13% and 38%, respectively.
BABA is looking to breakout past the $313 resistance level it's been struggling to get past this last week, and next Thursday's action will undoubtedly be market-moving for the Amazon of The East. You can see some of the levels to watch out for in my TradingView chart below. In case you can't see, I am looking at a resistant at $315, and robust support at $286 and $234, on a much larger pull-back. At both support levels, I am a buyer.
16 out of 16 analysts are calling BABA a buy today. Alibaba is going to the stratosphere, and you want to be on board when these shares start reflecting this extraordinary enterprise’s full potential. If this stock can materially break past $315, I believe BABA could soar to much higher price levels.
Remember Remember the 5th of November as this day could catalyze a massive valuation surge for this revolutionary enterprise.
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