Editor's Note: Bill Patalon just made one of the boldest "long-view" calls ever on General Electric Co., and now he's about to make an even gutsier one: Amazon.com Inc. isn't really the end-all, be-all of e-commerce stocks. No investor should miss this. Here's Bill...
Forget about Amazon.com Inc. (Nasdaq: AMZN).
Alibaba Group Holding Co. Ltd. (NYSE: BABA) is becoming the global e-commerce killer.
Last Friday, Nov. 10, I told my paid-up Private Briefing subscribers to expect a big sales day Saturday from Alibaba, the Chinese e-commerce giant that remains one of our very favorite stocks.
The catalyst for our optimism was "Singles' Day," a Chinese "shop-'til-you-drop" holiday that has become a yardstick analysts use to gauge Alibaba's near-term health. (Think Black Friday and Cyber Monday, plus the month before Christmas, and Valentine's Day, rolled into one great, big ball of revenue.)
As it turned out, they should have called it "Home Run Day" - the sales surpassed even the most bullish projections.
Let me share some of these numbers - because they will blow your mind.
Then, I'll show you what these numbers really tell us.
It's a conclusion nobody else is seeing.
And it's a takeaway that leaves me feeling more bullish than ever on Alibaba...
I'm Convinced: Alibaba Is a "Single-Stock Wealth Machine"
SFGate writer Mark Morford might have even understated it when he described China's Singles' Day as "Black Friday colliding with Cyber Monday in an orgasmic nightmare cataclysm of apoplectic consumerist hysteria, times four."
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The fact is that Alibaba moved a staggering $25.3 billion worth of goodies... in a single 24-hour period.
Here are the numbers I wanted to share.
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That $25 billion total:
- Was up 42% from the $17.8 billion worth of "stuff" sold on this same holiday last year
- Was far more than Black Friday and Cyber Monday ($6.76 billion) combined
- Is greater than the gross domestic product of Iceland
- And dwarfed the $1 billion Amazon moved during its most recent "Prime Day" - that
company's biggest day ever
As impressive as those raw numbers are, it's the "L-Word" numbers (logistics) that are the real keys.
Those are the stats related to order-taking, processing and fulfillment, and that show you whether or not a company can actually remain on its current trajectory of growth.
These numbers show that Alibaba absolutely can keep growing.
For instance, during Singles' Day, Alibaba:
- Offered 15 million products for sale
- Had 140,000 different brands participating
- Cleared $1 billion (the amount Amazon cleared in a day) in its first two minutes
- At one point, was processing 325,000 orders per second
- Delivered its first order within 12.18 minutes of purchase
- Took 812 million orders that will be delivered in the next few days
- Processed 1.48 billion orders through Alipay, the Chinese version of PayPal, and the
world's No. 1 mobile-payment platform
- And said that 90% of its orders came via mobile phones - up from 82% last year and way
above the 30% number for Black Friday here in the United States last year
Impressive numbers - staggering, even.
With a most impressive takeaway...
Buy One Stock, Take All the Marbles
During my 22 years as a business journalist - and during the five years I was in business school - I studied the logistical operations of many different companies. So I can say with great confidence that the efforts required here to fulfill all these orders is Herculean in scope.
But Alibaba is doing it.
It's really and truly pulling it off.
The company last year integrated both virtual reality (VR) and augmented reality (AR) into the shopping "experience" it offered consumers.
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This year, Alibaba has pulled Big Data into the logistical equation in a way that pulls online and offline shopping into one function - an effort being referred to internally as the "New Retail."
Here's why this is key.
Most American analysts have the (accurate) sense that China is "growing."
But, here in America, we lose sight of just how big China's market already is.
What's more, most of us have absolutely no concept of how massive it's destined to become.
According to a report in Forbes, China has more than 500 million middle-class consumers. In other words, just that country's middle class is 54% larger than the entire U.S. population (325 million).
China's retail market was worth $6 trillion last year and just keeps growing. And because so much business is done via the Internet, China will account for 60% of global e-commerce by the end of the decade.
As of the second quarter, Alibaba controlled more than 51% of China's e-commerce market. Even if it loses market share, it will still grow as the whole market grows.
China is an economic juggernaut, and Alibaba is the biggest player there.
Remember, on a global basis, two-thirds of "real GDP" ($114 trillion) is due to China and emerging Asia, while the former "Big Three" - North America, western Europe, and Japan - only account for 29% of what the world produces.
A company in prime position to tap that uber-rich vein of wealth and growth is one you must, must, must own.
That's a recipe for single-stock wealth, a "buy one and you're done" moneymaker.
There's a new business adage for consumer products firms that says "If you win China, you win the world."
Take heed, for there's an investment corollary that we just created: "If you want to amass winning wealth, you have to win in China."
With Alibaba, you can do that.
I "read the blitz" early on and recommended folks buy Alibaba on the first day it was offered - a rare IPO recommendation.
I encouraged folks to buy each time the stock has sold off, including back in January 2016, when it was trading at just $69 a share.
Those recommendations have given 166% in gains to the folks who acted on our call, but, given Alibaba's incredible future growth potential, those triple-digit gains are really just the first trickle in what's going to be a flood of cash.
The bottom line: Every single share of Alibaba that you buy today for $185 will be worth more than $2.1 million four-plus decades from now.
And that, folks, is the definition of a "Single-Stock Wealth Machine."
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About the Author
Before he moved into the investment-research business in 2005, William (Bill) Patalon III spent 22 years as an award-winning financial reporter, columnist, and editor. Today he is the Executive Editor and Senior Research Analyst for Money Morning at Money Map Press.