The Alibaba Group Holding Ltd. (NYSE: BABA) stock price today quickly climbed 0.8% to $91.41 around 10:00 a.m. The spike came after the company announced its film unit, Alibaba Pictures Group Ltd., will be raising an additional $1.57 billion.
According to The Wall Street Journal, Alibaba Pictures will be selling 4.2 billion new shares to raise the capital.
The entertainment company trades on the Hong Kong stock exchange and has seen its share price climb 145% in 2015. It was formerly known as ChinaVision Media Group Ltd. before Alibaba purchased it in June 2014.
The money will be used to fund additional acquisitions for the entertainment company. It's part of Alibaba's larger vision of creating a global brand with influence in numerous industries.
And that's not the only reason for the jump in the BABA stock price today...
On Wednesday, Alibaba officials announced they're spending $200 million to acquire a 30% stake in China Business News, a financial television and newspaper company.
The two companies are planning to develop financial data services that will use Alibaba's database of e-commerce statistics, The Journal reports. Alibaba also plans to incorporate stock quotes and investing information into its Alipay service.
Alibaba has been on an acquisition spree since before its September 2014 IPO. Some of its biggest recent purchases have been $590 million on a minority stake in the Chinese smartphone maker Meizu and $1.9 billion on the mobile web developer UCWeb. And it's been buying in numerous industries. In June 2014, it spent $192 billion for a minority stake in a Chinese professional soccer team.
During the IPO process, Founder Jack Ma told investors his plans to build a global powerhouse.
"We want to be bigger than Wal-Mart," Alibaba Founder Jack Ma said the day of the IPO. "We hope in 15 years people say this is a company like Microsoft, IBM, Wal-Mart; they changed, shaped the world."
That strategy and attitude are just part of the reason why BABA stock will be profitable for years to come...
BABA Stock Price Predictions
The Alibaba stock price has been volatile in 2015. It dipped below $80 in early May, and has since climbed back above $90.
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But Money Morning's Executive Editor Bill Patalon says what happens to the BABA stock price today is of little importance - because it is one of the best long-term stocks on the market.
"This company has market power, a visionary leader, and it's making smart decisions," he explained. "They're trying to build something special. A paradigm-shifting, rule-breaking company. They're trying to create new ways of doing things."
And while the company is growing globally, its home market of China is still a massive opportunity.
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. By comparison, the entire current population of the United States is just 319 million.
"Alibaba is gaining traction in its home market in China just as that country's people are truly joining the Internet revolution," Money Morning's Defense and Tech Specialist Michael Robinson said. "And the development of easy-to-use mobile commerce is giving Alibaba a strong tailwind."
Robinson is so bullish that he says Alibaba "could be the single-greatest wealth opportunity of our lifetime."
"What you have to look at is the long-term potential, which is still huge," Patalon said. "They still haven't even maxed out their own market. They're bringing in entertainment companies and new business-to-business ventures. They're going to keep expanding their offerings."
That's why Patalon urges investors to look past just the BABA stock price today.
"This isn't just a stock to buy for 2015," he explained. "This is a great investment for years to come. If you invest money that you can afford to lose and hold onto the stock for several years, you'll end up being very surprised by how much you've made."
Follow me on Twitter @KyleAndersonMM.
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Related Articles:
- The Wall Street Journal: Alibaba Pictures Raises $1.57 Billion from Share Sale
- The Wall Street Journal: Alibaba to Invest in China Business News