September 10, 2015 / 4:28 AM / in 2 years

Alibaba's Tsai: We are a long-term bet, in better shape than a year ago

HANGZHOU, China (Reuters) - Alibaba Group Holding Ltd Executive Vice Chairman Joe Tsai said on Thursday he is not thrilled that the e-commerce firm’s share price is below its listing level a year ago, but is confident the company is in better shape than it was then.

The logo of Alibaba Group is seen inside the company's headquarters in Hangzhou, Zhejiang province early November 11, 2014. REUTERS/Aly Song

Tsai said in an interview with Reuters that investors should take a long-term view of the stock rather than looking for a quarter-to-quarter pop.

“Are we thrilled that the stock is below IPO (initial public offering) price? No, absolutely not,” he said, but “on all the metrics we’re doing very well”.

Whereas market watchers have expressed fear of a Chinese economic slowdown crippling consumption, Tsai said the country’s consumers are “very, very healthy”.

But Alibaba, which has shed nearly 40 percent of its value since the start of the year, has not emerged unscathed from the effects of China’s fraught macro-economy. On Tuesday, it said it expected second-quarter gross merchandise volume (GMV) to be lower than initial estimates due to weaker consumer spending.

With wages rising strongly each year, unemployment low and the government committed to shifting the economy to services from manufacturing, Tsai said of consumers that “they’re going to be confident” - a boon for China’s biggest online shopping business.

Comparing the business environment to the 2008 global financial crisis, he said “we think the situation is very, very different.”

But with the giant’s revenue and GMV growth rates falling to their lowest in at least three years, and the rise of rivals like JD.com Inc, Alibaba has embarked on a multi-billion dollar program of diverse investments, ranging from sports to pharmaceuticals.

Rebuffing investor criticism that the company might be expanding too fast and spreading itself too thin, Tsai explained Alibaba’s strategy in terms of chess.

“When you put pieces on the chessboard, the observer may not understand why certain pieces are in a certain place, but we understand, we have a whole master plan behind it,” he said.

“It’s always hard for an outside observer to try to figure out what Alibaba’s trying to do, but we ourselves are very, very clear as to the strategy.”

Reporting by John Ruwitch and Paul Carsten; Editing by Christopher Cushing

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