We know that there’s a fortune in streaming media these days; anyone who doubts it need only look as far as Netflix’s (NASDAQ:NFLX) last quarterly report. But there’s a growing presence to consider, and that’s Chinese stock Alibaba (NYSE:BABA). It’s just put a hefty pile of resources into digital media, and that’s catching investor attention. Alibaba shares are up nearly 2% in Tuesday morning’s trading. Over the next five years, Alibaba is set to invest roughly $640 million into Hong Kong digital media through its Digital Media and Entertainment Group, which is one of the smallest parts of the Alibaba empire.
The cash will go toward promotion efforts for movies and television dramas. This comes after recent earnings reports revealed that the Chinese box office was on the rise. Some funding has already been slated for a set of productions, and Alibaba will even set up a second headquarters in Hong Kong.
Shaking Things Up
A major investment going behind a comparatively little part of the operation—Alibaba’s Digital Media and Entertainment Group represents about 2.3% of Alibaba’s consolidated revenue—is quite a stroke, but that’s not all. Alibaba is also said to be changing up its compensation schemes, focusing on drawing and keeping the best talent through a combination of cash and equity.
Moreover, equity options will vest faster, now taking place once a quarter rather than once a year. Given the current state of China’s economy, with joblessness running rampant, trying to keep an e-commerce operation up and running is a major task. As a result, it’s going to take a highly motivated staff to make things work.
What Is the Target Price for Alibaba Stock?
Turning to Wall Street, analysts have a Strong Buy consensus rating on BABA stock based on 15 Buys and three Holds assigned in the past three months, as indicated by the graphic below. After a 7.02% loss in its share price over the past year, the average BABA price target of $101.55 per share implies 33.01% upside potential.
