Singles Day, a Chinese holiday celebrating bachelors and bachelorettes, is a bigger sales event than Black Friday for e-commerce site Alibaba (NYSE:BABA). It is a day largely centered on excessive shopping and can generate more than $14 billion in sales for the Chinese retailer.
Despite these big numbers, for over a year, the company's stock has been struggling, largely due to investor concerns over regulatory scrutiny and increasing competition. But can this yearly holiday and its resulting sales boom alone help foster investor confidence and spark a turnaround? Host Chris Hill and analyst Jason Moser discuss this and more in the following video.
A full transcript follows the video.
This video was recorded on Nov. 11, 2015.
Chris Hill: It's Veterans Day here in the U.S. In China, it is Singles Day. And for those unfamiliar, singles day is basically the opposite of Valentine's Day. It was a holiday created so that bachelors and bachelorettes in China could celebrate single life largely by shopping.
Jason Moser: I'm going to buy something for myself.
Hill: I'm going to buy something for me. And it's big business. This is bigger than Black Friday and Cyber Monday combined in terms of online shopping. Alibaba doing more than $14 billion in sales in one day because of that. And you know what? Alibaba needs it.
Hill: They need that because their stock is still trading below the IPO of just over a year ago. So they need all the singles days that they can get.
Moser: They need all the singles they can get too, right? I mean they need, I'll tell you what they really need. I mean I think this is an interesting business for a number of reasons. I mean it is by far and away the market leader in Chinese e-commerce. And Jack Ma is a really smart guy who has a neat vision in trying to turn China more into an importer. I mean we know China more or less as the place where we have things, that's how we kind of get our things that we buy around here. I mean the Chinese, they import a lot of stuff to the United States.
And Jack Ma is trying turn China into an actual importer of goods from the United States, Russia, Brazil, wherever around the world. And it seems like that's even playing out. I saw some pretty big numbers there in regard to the shoppers on Alibaba's platform that were buying goods from outside of China. So I think that's encouraging. I always look at investing in China directly with a healthy dose of skepticism. I see no reason to really not look at it with a dose of skepticism because it's just not as transparent. We don't know a lot of the culture there.
Even when we get boots on the ground there, you don't understand exactly the culture unless you're from there. And so I think there's a bit of a disconnect there. And then if you just look at their ownership structure. Their ownership structure, the chart visually is just enough to give you a headache. And so when it's tough to connect the dots and ultimately you can kind of look at that and say, "Well really, shareholder's interests aren't the top priority here." And that's fine, they don't have to be. But investors should know that going in to a business like this. It's a big company.
I mean I feel like if you're going to invest in China, invest in the market leaders. Alibaba is certainly one of them, but again this is one where you don't make it an overweight part of your portfolio and it's something where you know that's a high risk going in.