Alibaba Group Holding Ltd. BABA -0.27% ’s stock has hit a record high, as investor confidence builds that the coronavirus pandemic has accelerated China’s rapid embrace of online commerce, and as its financial affiliate Ant Group Inc. prepares to go public.
The recent rally has lifted Alibaba’s market value above $800 billion, cementing its position as one of the world’s most valuable technology companies and opening a gap between it and Tencent Holdings Ltd. TCEHY 1.98% , China’s other dominant tech group.
Its New York-traded American depositary receipts closed Thursday at a record $300.54. Those shares have jumped 42% this year, according to FactSet.
DBS Bank analyst Tam Tsz Wang said Alibaba’s shares were sluggish earlier this year when movement in much of China was severely restricted, and as it struggled to fulfill a surge in demand for goods bought online.
Still, the disruption helped Alibaba grow in smaller cities and in home delivery of everyday items such as fresh fruit and vegetables, he said. “We are starting to see some positive results in the third and fourth quarter due to the positive structural change that has happened,” Mr. Tam said.
In contrast, Mr. Tam said that while Tencent benefited immediately from the lockdown, investors now expect growth in its games business to moderate from the third quarter onward as people return to work and have less time to spend on games.
Carmen Lee, head of OCBC Investment Research, said the impending listing of Ant, in which Alibaba holds a 33% equity stake, had helped it outperform Tencent in the past month. Both companies are up by similar percentages year to date.
Ms. Lee said investors seem to have shrugged off concerns that U.S.-China tensions could hurt Ant’s listing. Alibaba’s stock kept climbing despite reports the Trump administration was exploring restrictions on Ant’s Alipay and Tencent’s WeChat Pay over concerns that those payment platforms could threaten national security.
At an investor conference that ended Sept. 30, Alibaba said its cloud-computing business would turn profitable and its logistics arm, Cainiao, would have positive cash flow from operations in the financial year to March, further boosting its stock, said Chelsey Tam, a senior equity analyst at Morningstar.
“Generally, Alibaba’s management’s tone is about digitalization and how Covid has accelerated it,” she added, referring to Covid-19.
Alibaba shares also trade in Hong Kong, where they hit an intraday record of 293 Hong Kong dollars, the equivalent of US$37.81, on Friday. The stock later pared gains to close 1.2% lower at HK$286.20, slightly below last month’s record close of HK$291.20.