Alibaba smashes Singles Day record Alibaba smashes Singles Day record Alibaba smashes Singles Day record

Alibaba smashes Singles Day record

Equities 8 minutes to read

Summary:  This shopping extravaganza, invented by Alibaba itself, has now become a frenzy worth more than Black Friday and Cyber Monday combined. But what does this year's success mean for the Alibaba share and what does it say of the health of the Chinese consumer?

Alibaba just delivered another record-breaking online shopping event. The 11/11 “Singles Day” event achieved 213.5bn yuan ($30.7bn) in gross merchandise sales during the 24-hour online shopping extravaganza, outpacing the sales of US shopping holidays Black Friday and Cyber Monday combined.

In less than 16 hours last years 168bn Yuan record was surpassed, but despite record-breaking numbers, the annual sales growth rate has fallen to 27% from 39% in 2017. It is also worth noting that the GMV (gross merchandise value) growth number has historically had little bearing on December quarter financial results as shoppers tend to reserve purchases for Singles Day given the significant discounts and Alibaba’s revenues are more correlated with merchants' adverts and commissions. 

Source: Bloomberg
According the Alizila, Alibaba Group’s news network, during the 2018 festival, over 40% of consumers bought from international brands. The top countries selling to China were Japan, the US, South Korea, Australia and Germany. Also, 237 brands topped 100mn yuan in GMV, including leading international brands Apple, Dyson, Kindle, Estée Lauder, L’Oréal, Nestle, Gap, Nike and Adidas.

According to the national bureau of statistics in China online retail sales have slowed 10.3% throughout 2018, from 37.3% YoY in February to 27% YoY in September. However, the Singles Day sales numbers confirm that consumer confidence in China is not yet feeling the pinch from trade tensions and the domestic slowdown. The sales figure of 213.5bn yuan represents an average of 5% of per capita disposable monthly income spent across the entire Chinese population. In fact, on these numbers alone, it looks like the secular growth thematic of the middle-class consumption premiumisation we have previously written about is alive and well and consumers certainly haven’t stopped shopping.  

Another secular growth theme arises from China’s lower-tier cities and rural areas as they become larger and wealthier, injecting further consumption potential into the economy. Income growth and urbanisation upgrades purchasing power in these areas which has been a key focus for Alibaba’s Taobao platform. Alibaba offered discount coupons in rural counties to promote customer penetration beyond cities, as well as employing “Rural Taobao representatives” at village centres. This has proven to be a successful strategy with sales in rural areas picking up in this year's Singles Day frenzy. Sales of Buick vehicles in rural areas, an automobile brand of the American manufacturer General Motors (GM), accounted for 1/7th of the total Buick sales. 

There are currently 52 sell-side analysts covering Alibaba, of which 51 have a buy rating with just one hold rating. The average 12-month price target is $206.53, which represents a 42.6% premium to yesterday's close. 

Despite sell-side analysts’ bullish recommendations, Alibaba’s stock has declined substantially in recent months. Alibaba is now trading 30% off the June 2018 highs, but long-term growth and earnings potential is still robust despite the economic impact of trade tensions.

If you are a long-term investor, the fundamentals are strong for Alibaba and the recent pullback in price could present an opportunity, although downside risks exist if the macro headwinds in China persist. However, given the large equity market declines and indiscriminate sell-off that has already been seen YTD, one could argue that the growth slowdown and adverse trade war impact has already been priced-in, leaving limited downside risk in the market. With the Chinese government being firm on supporting the economy it is our expectation that further weakness from here will not take the market down and that Beijing’s support should not be underestimated.

Alibaba enjoys a dominant position in the Chinese market and has increased its footprint both domestically as well as into new markets, leaving it firmly placed for expansion in the coming years. The Chinese middle class will grow from 12% of the country's population in 2009 to 73% in 2030, according to OECD statistics. These demographic shifts have unleashed a wave of consumer spending in China from which Alibaba benefits. The company operates two of China’s most popular online market places, Taobau and Tmall, which are the go-to options for products and services online. 
Source: September Quarter Presentation
Surveys have shown more than 66% of shoppers prefer these marketplaces above others. The interconnected marketplaces drive traffic to each other, which lowers user acquisition cost. In Q3, Alibaba had significant user growth, adding 32mn more mobile monthly active users (MAUs). This represents an increase of 21% YoY, which is impressive given the user base already consisted of 549mn users, proving again that growth is still achievable despite the headwinds in China. As the Chinese consumer continues to spend and as purchasing power increasing, Alibaba's commerce revenues will continue to grow.

Alibaba is also transitioning away from the pure e-commerce model towards a “new retail” model, having expanded towards branded convenience stores and automated Hema supermarkets to combine offline and online and expand their target market. Hema currently has little contribution to Alibaba's revenue, but over the long term the business model should continue to drive growth being more efficient than just eCommerce or just bricks-and-mortar retail. 

Alibaba’s Lazada acquisition has allowed the parent company to establish a network in growth areas like Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam. This expansion gives Alibaba’s third-party merchants access to 200mn additional active internet users in an underpenetrated e-commerce market.

Alibaba also owns a 33% stake in Ant Financial which contains the WeChat pay competitor Alipay. AliPay holds around 50% of the mobile payment market by transaction volume. Alibaba has created a lifestyle ecosystem for the ever-growing consumer-centric economy in China, comprised of interlocking networks offering complementary services creating a powerful network effect, which is difficult to move away from.

Alibaba is the leader in the Chinese cloud computing market and is investing for growth in the longer term with the development of Alicloud, and investments in AI and machine learning. These investments put pressure on margins in the short term, but the company is investing for future growth. As gross margins expand, and operational expenditure slows, higher margins will be achieved in this segment of the business and long-term investors can forgo a drag on margins in the short term as profit will be higher in the long term

Overall, Alibaba is an attractive way to play Chinese consumption and mobile technology trends with increasing consumer disposable income and consumption trends and increasing internet and mobile adoption. Whilst Alibaba’s business is fundamentally sound the share price could still exhibit further downside especially if we see another round of tariffs enacted on Chinese goods in January. 

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (

40 Bank Street, 26th floor
E14 5DA
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo is a registered Trading Name of Saxo Capital Markets UK Ltd (‘Saxo’). Saxo is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.

©   since 1992