BABA Stock: Today's Alibaba Sales Are the Most Important of the Year

It's Singles' Day in China and customers are celebrating early - which is huge for Alibaba stock.

In fact, more than $1 billion was spent over Alibaba Group Holding Ltd.'s (NYSE: BABA) network of sites during the first 17 minutes of the day.

20140918-alibaba-ipo-priceSingles' Day has grown into a huge holiday in China. Each year on Nov. 11 (think 11/11) single men and women celebrate their single lives by showering themselves and each other with gifts. The holiday is particularly popular with young people, who throw parties and spend tons of cash.

To Americans the holiday means nothing. But to those investing in BABA stock, it's the biggest day of the year.

On Singles' Day 2013, more than $5.7 billion exchanged hands over Alibaba's two biggest sites, Taobao and Tmall. This year, analysts expect spending to fall between $8 billion to $10 billion.

The closest U.S. equivalent, Cyber Monday, did just $1.7 billion in total transaction volume in 2013.

The company is easily on pace to reach that goal. After one hour, Alibaba had already reported $2 billion in transaction volume today.

The amount of money spent on Singles' Day has grown exponentially. In 2009, just $7 million was spent on Alibaba's sites.

"As incomes rise and the observance of this day gains traction, China's retailers have increasingly targeted young spenders, correctly viewing them (and this event) as a major revenue opportunity," Money Morning's Executive Editor Bill Patalon said.

"Online retailers host 'sales' - like we do on Presidents Day or Labor Day - and are digging into the usual bag of tricks retailers resort to when trying to encourage spending," he continued.

Because of the 13-hour time difference between Beijing and New York, Singles' Day began during Monday's trading session. BABA stock was already up on the news, closing Monday with a 1.6% gain at $119.15. It set a new all-time high of $119.45 during afternoon trading.

Alibaba stock was offered for $68 per share through its IPO on Sept. 18. That's a gain of 73% through Monday. Since reporting quarterly earnings on Tuesday, Nov. 4, the BABA stock price has climbed 19% in just five trading sessions.

Patalon has been recommending Alibaba since early in 2014 - months before the company went public -and investors have already seen big returns. Here's his strategy for investing in BABA stock now...

The Best Way to Play Alibaba Stock After Singles' Day

The growth in Singles' Day sales is just the start for Alibaba.

BABA stock When the company reported earnings last week, revenue had jumped 54% from the previous year to $2.7 billion.

The e-commerce giant also had 307 million active annual buyers. That's an increase of 52% from the previous year. That led to a 49% increase in its transaction volume, which hit $90.5 billion in the quarter.

Alibaba is growing its mobile division as well. The company now has 217 million mobile users, who account for 35.8% of the total transaction volume. This quarter mobile revenue jumped more than 1,000% year over year.

The timing of those growth figures are all reasons why Patalon has regularly referred to Alibaba as "the next Wal-Mart."

Right now, the Chinese middle class is seeing the same type of growth that the American middle class saw in the 1970s.

"Alibaba offers today's investors the same profit opportunity that Wal-Mart Stores Inc. (NYSE: WMT) offered when it went public back in 1970," Patalon said. "And Chairman Jack Ma is clearly already looking to the U.S. market."

"Alibaba just went public in September," he continued. "With the emergence of its middle class, China is right now where the United States was in 1970 - which is when Wal-Mart had its initial public offering (IPO)."

Patalon points out that investors who bought $1,650 worth of WMT shares in 1970 are sitting on a $15 million profit today. He believes BABA stock has similar long-term potential.

The growth from the Chinese Internet industry shows no signs of slowing down. A recent study by the China Internet Network Information Center (CNNIC) determined the number of Internet users in the country will hit 800 million by 2016 or sooner.

"With Alibaba, look to put some shares away for the long haul. And add to the position if the share price should decline," Patalon said.

And he's not the only one bullish on BABA. Money Morning's Chief Investment Strategist Keith Fitz-Gerald has also been watching the company closely for years.

"I love Alibaba and I love what they stand for," Fitz-Gerald said on FOX Business today. "I've recommended Alibaba stock for a long time. I think the stock has a long way to go from here, and the company is going to rewrite the Internet."

What to Read Now: Money Morning's Chief Investment Strategist Keith Fitz-Gerald made the rare move of releasing one of his subscriber stock recommendations to the public last week. But according to him, the profit opportunity from this discounted stock is too good not to share...

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