Facebook or Alibaba. One — or both — of the tech giants could become the market’s next trillion dollar company next week.
Facebook (FB), the world’s top social media platform and fifth busiest website in the world, reports earnings. It’s jumped the last two quarters, including a solid beat on July 30. Mark Zuckerberg’s company also has excited Wall Street with a new small-business service called “Shops.” Updates on that offering could be especially impactful, especially with the holiday shopping season around the corner.
FB got another boost yesterday after smaller rival Snap (SNAP) reported a super-bullish quarter. Its metrics like revenue and usage demonstrated that social media has gained a ton of eyeballs from the pandemic. Twitter (TWTR) and Pinterest (PINS) also shot to new highs.
Facebook (FB), daily chart, with 50- and 200-day moving averages.
FB was valued at $794 billion yesterday. Earnings are due on Thursday, October 29 in the post-market. That’s the same day as Apple (AAPL), Amazon.com (AMZN), Alphabet (GOOGL) and TWTR.
Alibaba and Ant Group
Alibaba (BABA) has an even bigger footprint, operating two of the world’s 10 biggest websites. (Both are Chinese: Tmall and Taobao.)
|Top Stocks in U.S. by Market Cap|
|Apple (AAPL)||$2 trillion|
|Microsoft (MSFT)||$1.6 trillion|
|Amazon.com (AMZN)||$1.6 trillion|
|Alphabet (GOOGL)||$1 trillion|
|Alibaba (BABA)||$838 billion|
|Facebook (FB)||$762 billion|
|Berkshire Hathaway (BRK.B)||$502 billion|
|Visa (V)||$421 billion|
|Wal-Mart Stores (WMT)||$408 billion|
|Taiwan Semiconductor (TSM)||$407 billion|
Source: TradeStation Data
Its catalyst is the initial public offering of its online payments subsidiary, Ant Group. Ant owns Alipay, the “PayPal of China.”
Underwriters have raised Ant’s valuation several times because of strong demand. They’ve now settled on $280 billion, of which $35 billion will go public. It will be the biggest IPO ever.
The hitch is that it’s only available in the Chinese markets of Shanghai and Hong Kong. U.S. investors can access it via BABA, which historically owned one-third of Ant. According to a Bloomberg report last night, BABA will boost that stake by purchasing one-fifth of the IPO.
BABA was valued at $831 billion yesterday. The Ant IPO will occur on Tuesday, October 27 in the pre-market, according to Bloomberg and CNBC.
There will be further catalysts not long after. BABA typically reports earnings in early November, although management hasn’t yet announced the official date. Singles Day, the giant Chinese online shopping day, follows on November. 11.
In conclusion, next week is massively busy for major technology companies. Most people know about the flood of earnings. But there’s also a potentially huge catalyst taking shape on the other side of the world in a country that’s rapidly becoming the new center for tech investing.
Alibaba (BABA), daily chart, with 50- and 200-day moving averages.
This article was written by David Russell, TradeStation Securities, Inc., part of the Monex Group Inc, published on 22/10/2020.
David Russell is VP of Market Intelligence at TradeStation Group. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.