Why Alibaba Stock Was a Winner Today
What happened
Chinese e-commerce titan Alibaba (NYSE: BABA) plans to push assertively into a large and juicy market, a prospect that pleased investors on Thursday. The news sent the company's stock price more than 3% higher, which trumped the 1.2% rise of the S&P 500 index on the day.
So what
Alibaba's president J. Michael Evans revealed this during a technology conference held in Paris.
He said, "What we will focus more for the future is to build local businesses, so you will see something called TMall which we have in China become TMall in Europe, which means we will serve local brands and local customers in local markets."
Alibaba has struggled with a sustained Chinese government crackdown on big tech companies. As it is one of the flagships of that sector, the e-commerce company has been an unwanted focus of this initiative. This is a key reason why it is eager to look for opportunities abroad.
In March, the company said it would divide itself into six separate entities. Although it wasn't very specific about its plans, it did say that it would seek to raise fresh capital -- perhaps in the form of stock market listings -- for most of them. It isn't yet clear whether the European version of TMall will be one of these stand-alone units or part of a larger entity.
Now what
It's sensible for Alibaba to ramp up its efforts to draw money from non-Chinese markets. However, what has worked brilliantly in its native market likely won't be nearly as successful abroad. It remains to be seen whether its offerings can resonate with non-Chinese consumers as much and as deeply as they did in China.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.
