In This Article:
Alibaba (NYSE:BABA) began a new era this month. Founder Jack Ma stepped down as chairman, a role that now belongs to current CEO Daniel Zhang. Although leadership transitions always bring some degree of uncertainty, it so far does not look like a factor that will hurt Alibaba stock.
Source: zhu difeng / Shutterstock.com
However, several external issues have held down BABA stock. Unfortunately for traders, these factors will probably continue to hamper Alibaba Group for the foreseeable future. Still, as long as Mr. Zhang preserves one thing, investors can earn substantial returns in Alibaba stock.
Jack Ma’s Departure Changes Little
Jack Ma’s has taken a gradual approach in stepping away from the company he founded. He vacated the CEO position in 2013 but remained chairman of the board until this month. Mr. Ma will retain a seat on the company’s board. Still, the company now belongs to Daniel Zhang, a man who has held the CEO position since 2015.
InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Many worry about the change in leadership. However, Alibaba made the transition a years-long process that has involved little in the way of surprise. Thus far, it looks like it will resemble that of Tim Cook taking over at Apple (NASDAQ:AAPL) as opposed to the transition that preceded Jeff Immelt’s disastrous tenure at GE (NYSE:GE). Since Zhang has become a known quantity, I do not see Alibaba making radical changes. Likewise, I do not see any significant revisions in the case for or against Alibaba stock.
To be sure, one thing has remained the same about Alibaba Group regardless of leadership. The best thing about Alibaba stock is its connection to China. Likewise, the worst thing about BABA stock is its connection to China.
Profit Growth Boosts BABA
Like it or hate it, Alibaba stock is a growth machine. Analysts forecast earnings increases of 23.3% this year and 26% the next. They also predict revenue will grow by 31.9% and 29% in the same respective periods.
Management can take much of the credit for these increases. Acquisitions such as the recent purchase of the NetEase (NASDAQ:NTES) e-commerce platform Koala merely enhance these increases long term. Also, with the continuing growth of China’s middle class, BABA stock to maintain or increase its growth. More importantly, these increases come amid the current challenges facing Alibaba. Thus, the stock should deliver significant returns to investors even if external conditions do not improve.