Thread by @kevg1412

1/ $BABA added half an $AMZN of GMV and increased top line by $PDD total revenue just last year…

Investor sentiment?

Competition is going to smoke them...

2/ But wait, I thought they were a monopoly? They were just fined by the SAMR.

Investor response: Regulation is a big concern too

3/ Well, does China really want to cripple the engine that facilitates over $1.2tn of commerce that millions of merchants’ livelihood depend on?

We don’t think so.

4/ But what about the competition?

Frankly, it’s ruthless…

$PDD is gaining share on lower end commerce, $JD is relentlessly attacking the high-end, Meituan is going after high-frequency local, and Kuaishou, Douyin, and others threaten share in discovery commerce…

5/ We know this means margins likely go down...

… but that’s nothing new. Adj. EBITDA margins dropped 30 points in the last 5 years

Innovator's Dilemma is clearly the wrong framework

6/ But what about their competitive position?

We think they will lose market share, but can they still grow? Or could they see GMV shrink for the first time ever?

7/ Dismissing BABA could be a mistake… they seem to have a strong hand to remain relevant with the deepest product selection, the most selling formats, a unique product description platform, the most purchase data with a 3rd party ad network to drive traffic and…

8/ … over 10mn merchants who are highly invested in BABA’s platforms with it often being their most important sales channel.

9/ Add in 800mn+ buyers who buy an average of twice a week, seamless integrations with the country’s largest payment method–which itself is a large funnel of traffic–and Cainiao’s logistics network and you can see why $BABA may be underestimated…

10/ This is before mentioning all of the other strategic initiatives and assets in New Retail, Money-for-value, augmented reality, and many more that can further create a unique value prop.

11/ So why is the market pricing $BABA like it’s in secular decline?

PDD does have more buyers than BABA now and some think Taobao is stale...

12/ … Buyers clearly have other options and there is no “Prime” lock-in on the consumer side or widely adopted fulfilment to create exclusive inventory on the merchant side.

13/ Is the market wrong or is it missing something about the Alibaba Ecosystem?

14/ And what about all their other businesses like Alicloud, Taobao ad network, Alipictures, Eleme, Lazada, Youku, 1688, Dingtalk, and New Retail?

15/ We answer all this and more in this month’s paid 24,000 word $BABA deep dive informed by dozens of industry executives, ex-employees, merchants, and consumers.

See full table of contents here:

djyresearch.com/2021/06/24/ali…