Alibaba Cloud made US$9.2 Billion in revenue for FY21 and grew 33% YoY.
They have ~38% market share of the cloud industry in China. Which is slightly more market share than AWS has in the US.
Thread/
$BABA cloud business is being completed missed by the market.
Let me explain why Alibaba Cloud, which makes up just ~10% of LTM revenues, could become worth more than the entire current market cap by FY25
Alibaba Cloud made US$9.2 Billion in revenue for FY21 and grew 33% YoY.
They have ~38% market share of the cloud industry in China. Which is slightly more market share than AWS has in the US.
In their investor presentation, $BABA projected that the cloud market in China will grow at a 37% CAGR until 2025.
The IDC estimated the CAGR to be 33% over the next 5 years.
The global cloud market is estimated to grow at 17.5% annually.
If we take the IDC’s more conservative annual growth estimation of 33%, and $BABA maintains their 38% market share, they would generate $28.8 billion of revenue in FY25.
Alibaba cloud even benefit from scale economies and continue to take more market share.
If we apply a 10x sales multiple we get to a $288 billion valuation for the cloud business in FY25.
Analysts typically value AWS, Azure & Google cloud at closer to 15x sales. So a 10x multiple for a company with more domestic market share and a higher CAGR isn’t unreasonable
The $288 Billion FY25 valuation is equal to 88% of the current $BABA market cap. Whilst it currently contributes to just ~10% of the total revenues.
The upside from Alibaba cloud is something the market seems to be missing, although it is uncertain.
I’ll discuss China’s cloud industry in depth in my newsletter write-up on $TCEHY which is out in a few days.
Sign-up for free for a monthly deep dive.
https://t.co/8aND3n3T0Y
More from Baba
You May Also Like
I just finished Eric Adler's The Battle of the Classics, and wanted to say something about Joel Christiansen's review linked below. I am not sure what motivates the review (I speculate a bit below), but it gives a very misleading impression of the book. 1/x
The meat of the criticism is that the history Adler gives is insufficiently critical. Adler describes a few figures who had a great influence on how the modern US university was formed. It's certainly critical: it focuses on the social Darwinism of these figures. 2/x
Other insinuations and suggestions in the review seem wildly off the mark, distorted, or inappropriate-- for example, that the book is clickbaity (it is scholarly) or conservative (hardly) or connected to the events at the Capitol (give me a break). 3/x
The core question: in what sense is classics inherently racist? Classics is old. On Adler's account, it begins in ancient Rome and is revived in the Renaissance. Slavery (Christiansen's primary concern) is also very old. Let's say classics is an education for slaveowners. 4/x
It's worth remembering that literacy itself is elite throughout most of this history. Literacy is, then, also the education of slaveowners. We can honor oral and musical traditions without denying that literacy is, generally, good. 5/x
As someone\u2019s who\u2019s read the book, this review strikes me as tremendously unfair. It mostly faults Adler for not writing the book the reviewer wishes he had! https://t.co/pqpt5Ziivj
— Teresa M. Bejan (@tmbejan) January 12, 2021
The meat of the criticism is that the history Adler gives is insufficiently critical. Adler describes a few figures who had a great influence on how the modern US university was formed. It's certainly critical: it focuses on the social Darwinism of these figures. 2/x
Other insinuations and suggestions in the review seem wildly off the mark, distorted, or inappropriate-- for example, that the book is clickbaity (it is scholarly) or conservative (hardly) or connected to the events at the Capitol (give me a break). 3/x
The core question: in what sense is classics inherently racist? Classics is old. On Adler's account, it begins in ancient Rome and is revived in the Renaissance. Slavery (Christiansen's primary concern) is also very old. Let's say classics is an education for slaveowners. 4/x
It's worth remembering that literacy itself is elite throughout most of this history. Literacy is, then, also the education of slaveowners. We can honor oral and musical traditions without denying that literacy is, generally, good. 5/x
