Alibaba (BABA): Problems with the Meeker "Internet Trends" Report - Suntrust

Since the release of the annual Meeker "Internet Trends 2016 Report" SunTrust Robinson Humphrey analyst, Robert Peck has had discussions with investors over concerns regarding a few charts that indicated Alibaba (NYSE: BABA) having a weaker position than expected in: its relative size in China Retail; Alipay’s share of Payments; and relative Time Spent. He believes that some of the data was incomplete and highlighted 3 points.

1) Concerns over Alibaba’s comparative size: The chart Top 7 Retailers in China in 2015, showed Alibaba about 2.5x bigger than JD.com in “Revenues” for 2015. For investors, this table reflects “GMV” for Alibaba and JD (NASDAQ: JD). However, these figures EXCLUDE all of Taobao GMV as it is deemed “C2C”. The analyst estimates that ~70% of Taobao’s GMV is small/ medium merchant B2C and when added back, it increases Alibaba’s GMV size to >5x JD.

2) Alipay’s Share of Mobile Payments. Alibaba owns 37.5% of Ant Financial, the owner of Alipay. Investors asked about a slide that shows WeChat Pay about 5.5x bigger that AliPay. However on Total Payment Volume (TPV), iResearch indicates Alipay has 68% market share vs. Tenpay (powers WeChat Pay) at 21%. Also, according to the 2016 China Payment and Settlement Industry Report, Alipay is the #1 merchant acquirer, ahead of ICB and UnionPay.

3) Time Spent Data. Data on “Daily Mobile Time Spent” indicated that all of Alibaba’s properties together were ~11% of time spent (or just 22 minutes) vs. We Chat at 39% and QQ at ~11%. These averages understate the engagement levels for Alibaba sites since the calculation assumes that every app is used by all ~620M internet users (Taobao MAU/DAU = ~369/150M). However, using the same Quest data set, Alibaba has a suite of apps that show time spent per user on par with Tencent (NASDAQ: and Baidu (NASDAQ: BIDU); plus its mobile commerce app Taobao, drives >24 minutes per day across its ~150M DAUs.

No change to Buy rating or $90 PT.

For an analyst ratings summary and ratings history on Alibaba click here. For more ratings news on Alibaba click here.

Shares of Alibaba closed at $76.28 yesterday.

You May Also Be Interested In

• China acquired top-end Nvidia AI chips despite recent US ban- Reuters
• Alibaba.com Unveils Affordable, Customizable Logistics Solutions for U.S. SMEs
• Morgan Stanley on Alibaba (BABA): 'e see upside risk to Alibaba's take rate and room for top-line estimates to rise'