Investors who have owned stocks since 2016 have generally made some big gains. Indeed that SPDR S&P 500 (NYSE: SPY) Total return over the past five years is 114.1%. However, there is no question that some big-name stocks fared better than others along the way.
Alibaba’s impressive growth: Over the past five years, Chinese mega-cap tech stocks Alibaba Group Holding Ltd – ADR (NYSE: BABA) left its US tech peers in the dust with their growth numbers.
Alibaba’s core e-commerce and cloud services businesses have seen 12-month trailing revenue growth of 425% since 2016, more than double the revenue growth rate of 206% Amazon.com, Inc. (NASDAQ: AMZN) reported during this time.
Unfortunately, Alibaba has seen a handful of headwinds that its U.S. peer group doesn’t. In early 2016, Alibaba and other Chinese stocks hit a bid on concerns that economic growth is slowing in the world’s largest emerging market economy.
Alibaba started 2016 trading around $ 81. During the worst sell-off in Chinese stocks in early 2016, Alibaba fell to $ 59.25, the lowest point in five years. From then on, buyers began to better understand Alibaba’s long-term growth story, and the stock began to rise.
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Alibaba hit new all-time highs above $ 120 in mid-2017 and hit $ 200 for the first time in early 2018. Unfortunately, the stock was hit again by forces beyond their control when U.S. President Donald Trump waged a trade war with China at the centerpiece of his administration. Concerns about the negative impact of the trade war drove Alibaba shares back to $ 129.77 by the end of 2018.
Quarter after quarter, the staggering growth in 2019 sparked another comeback, with the stock breaking above $ 300 for the first time in late 2020 in anticipation of the highly anticipated IPO of Alibaba’s financial firm Ant Group, which Alibaba has a stake in of 33%. Unfortunately for investors, Chinese regulators cracked down on Ant’s IPO, which was ultimately postponed, after Alibaba and Ant co-founder Jack Ma publicly criticized the Chinese government.
The story goes on
Alibaba In 2021, beyond: While other cloud and ecommerce stocks hit new highs in the final weeks of 2020, Alibaba stocks fell to $ 211.23 before rebounding to around $ 257 today.
Despite all the political drama, Alibaba investors who bought and held five years ago were still generating impressive returns. In fact, $ 1,000 worth of Alibaba stock bought in 2016 would be worth about $ 5,816 today.
Looking ahead, analysts expect Alibaba’s growth numbers to reassure investors in the months ahead. The average target price among the nine analysts covering the stock is $ 330.19, up 28.4% from current levels.
Photo: Andy Mitchell, Flickr
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