Markets

Jack Ma, Trump Just Made Alibaba Stock Great Again

Shares of Alibaba (BABA) didn’t end 2016 on a strong note, falling some 12% over the past three months, driven by Alibaba being added back on America's 'Notorious' List. I’ve offered my own opinions about that distinction, which I think is bogus. But that’s for another time.

Founder and executive chairman Jack Ma, who on Monday met with President-elect Donald Trump at Trump Tower, is intent on making BABA stock — down 14% from its 52-week high — great again. The shares closed Monday at $94.72, up 0.88%. Ma on Monday met with Trump to discuss the company's commitment to create 1 million new jobs in the United States over the next five years.

Trump had been vocal about his disdain for the Transpacific Partnership, campaigning with promises to bring back jobs to the U.S., which he felt was losing to China from the standpoint of trade. "I think the door is opened for discussing the relationship on trade issues. I'm thinking that the President-elect is very smart," said Ma. "He's very open-minded listening. So I tell him my ideas about how he can improve the trade, especially supporting small business."

But Ma, as nice of a guy as he appears to be, didn’t become China’s wealthiest man just by being a good Samaritan. By his willingness to help Trump achieve a campaign promise, Ma is killing two birds with one stone.

First, as I noted, Alibaba in December was placed back on America's 'Notorious' List after being removed from it since 2012. The Chinese e-commerce platform has been the target of numerous consumer protection agencies for what is believed to be fake knockoffs that are sold on its platform. Vowing to fix its reputation, Alibaba has recently taken two vendors believed to have sold fake Swarovski watches on its online shopping platform Taobao to court.

While the lawsuit is certainly a huge step in Alibaba’s efforts to police its platform, having Trump as an ally with the goal of creating 1 million new U.S. jobs can remove or soften the pressure Alibaba faces from U.S. consumer-protection regulators.

Secondly, growing outside of its Chinese borders was already a top 2017 objective for Ma and Alibaba CEO Daniel Zhang.

Often compared to Amazon (AMZN), Alibaba already laid out plans last year to expand not only its e-commerce platform in the U.S. in 2017, but also its Alicloud and Alipay platforms. In other words, while Ma — by promising to create 1 million U.S. jobs — gave Trump a public victory, the real winner stands to be Alibaba, which may get U.S. regulators off its back, while getting the support it needs from Trump to meet its own growth objectives in the U.S.

As for BABA stock, expect the shares to reach $120 in 2017 on the strength of positive Chinese-U.S. relations and timely tweets from Trump, praising Ma’s “genius.”

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Richard Saintvilus

After having spent 20 years in the IT industry serving in various roles from system administration to network engineer, Richard Saintvilus became a finance writer, covering the investor's view on the premise that everyone deserves a level playing field. His background as an engineer with strong analytical skills helps him provide actionable insights to investors. Saintvilus is a Warren Buffett disciple who bases his investment decisions on the quality of a company's management, its growth prospects, return on equity and other metrics, including price-to-earnings ratios. He employs conservative strategies to increase capital, while keeping a watchful eye on macro-economic events to mitigate downside risk. Saintvilus' work has been featured on CNBC, Yahoo! Finance, MSN Money, Forbes, Motley Fool and numerous other outlets. You can follow him on Twitter at @Richard_STv.

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