KeyBanc: Alibaba Investors May Not Realize Value Of TikTok Marketing

Alibaba Group Holding Ltd – ADR BABA may see a much bigger benefit from trendy social media content marketing than investors realize, and an upcoming investor meeting could shed some light on the potential and drive up the stock, according to KeyBanc Capital Markets. 

The Analyst

Hans Chung reiterated an Overweight rating on Alibaba with a $245 price target.

The Thesis

Investors may be overlooking or underestimating the impact of “key opinion leader”-driven content models for the Chinese e-commerce company, specifically from its partnership with TikTok company Douyin, which could achieve gross margin value of more than $14 billion a year, Chung said in a Monday note. (See his track record here.) 

Alibaba’s partnership with Douyin, which allowed users with lots of followers to add a shopping button on their videos on the app, reportedly drew in 100 million users in the first year, the analyst said. 

"We believe content/key opinion kleader-e-commerce could be one of the major topics at BABA's upcoming investor day next week, which could be a near-term catalyst for the stock." 

Key opinion leaders are more and more driving increased sales through platform content, like TikTok’s short videos, Chung said, adding that Alibaba could be “the biggest beneficiary of this secular trend.”

Price Action

Alibaba shares were up 0.96% at $178.77 at the time of publication Tuesday. 

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