Jim O'Donnell: The Total Addressable Market Alibaba Still Have To Penetrate Is Huge

Alibaba Group Holding Ltd BABA disappointed investors and analysts alike when it declared its quarterly results on Wednesday. However, according to Jim O'Donnell, Chief Investment Officer of Forward Management, not all hope is lost for the company. O’Donnell was on CNBC recently to opine on why Alibaba is still a ‘great long-term story’.

Analysts Got ‘Frisky’

“The franchise they have built in terms of the size and the scale of the franchise,” O’Donnell said. “It’s the envy of everybody globally in e-commerce. The number of active users, everybody else pales in comparison. The total addressable market that they still have yet to penetrate is huge and 40p growth…is absolutely astonishing.”

He continued, “So, I think what we are looking at here is a situation where expectations got a little bit ahead of themselves; the analyst community got a little bit frisky with some of the monetization ramp statistics. I think that they’ll back those off, but in terms of a great long-term story Alibaba is it.”

How Much Is Alipay Going To Drive The Revenue Stream And Will It Be The Springboard For Expansion?  

“I think, they do have the entire platform, they do have designs outside of China,” O’Donnell replied. “They do have a little bit of home court advantage inside of China being a national champion. They may face a little bit of more difficult competition as they step outside of China and clearly they have got designs on becoming a global franchisee, but they still of room to grow just inside of China alone.”

“In terms of breaking it down segment by segment, it’s a little bit too early to tell whether those are going to be the big growth drivers outside of China, but Alipay is a formidable franchise.”