The Alibaba stock price was up as much as 2.6% Friday morning after Alibaba Group Holding Ltd. (NYSE: BABA) officials announced a $3.6 billion offer for the Chinese video streaming site Youku Tudou Inc. (NYSE: YOKU).
The Alibaba stock price is now up nearly 22% in October.
Youku Tudou operates like a mix of YouTube and Netflix Inc. (Nasdaq: NFLX), with user-generated videos as well as movies and television programs. According to the company, it has more than 500 million people access its site every month.
YOKU shares jumped more than 22% Friday on the news to $25.31. Alibaba will be paying $26.60 per share through the deal. YOKU stock has now climbed 51.3% in 2015.
While Youku has a huge user base, it has been bleeding money. In the last fiscal year, Youku had a profit margin of -26.6%.
This is just the latest in a string of acquisitions for Alibaba. In August, Alibaba spent $4.6 billion for a stake in the Chinese electronics chain Suning Commerce Group Inc. Over the past two years, BABA has purchased companies in numerous industries including entertainment, retail, tech, and even professional soccer.
It's part of Alibaba's plan to become more than just an e-commerce company. It's something that Alibaba Chairman Jack Ma shared with shareholders in a letter last week.
"Our key priorities for the next decade will be globalization, development of the rural economy and big data," Ma said. "At this historic time, Alibaba Group must embrace change, invest in change and drive change."
That's a part of the reason Money Morning Executive Editor Bill Patalon remains bullish on the Alibaba stock price, even after it has fallen 31% in 2015...
Why We're Bullish on the Alibaba Stock Price Now (NYSE: BABA)
Many investors panicked when Alibaba shares started falling after the 2014 IPO, sending shares lower throughout 2015. But that's common for highly anticipated IPOs like Alibaba's.
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"I knew that, as a hot IPO, there was every chance the stock could - and probably would - sell off," Money Morning Executive Editor Bill Patalon said. "It's a 'transformational' type of company, meaning its leaders are 'planting seeds' right now that will have big future payoffs."
Patalon says you can't look at Alibaba as a short-term investment. This is the kind of stock you buy and hold for a long period of time. The company has its sights set on the long term.
"Alibaba's moves into entertainment, media, cloud computing - these are all part of a broad vision Jack Ma and his executive team has for Alibaba," Patalon said.
Because of this global growth strategy, Patalon refers to BABA stock as a "legacy wealth" play. That means it's the type of stock to buy and hold for not just years, but decades. By doing so, you have the chance to bank profits for the foreseeable future.
The Alibaba stock price is now up more than 25% from the low of $57.20 it hit on Sept. 29.
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