Alibaba data found that online women shoppers often buy expensive items when major sporting events take place. (Photo : Reuters)
Bronte Capital hedge fund manager John Hempton is questioning the numbers of Chinese e-commerce giant Alibaba. However, the basis of his doubt, which he wrote in a blog post this week, are fresh college graduates who applied for entry-level positions in his company.
First, Hempton cites the 278 million orders that Alibaba allegedly received on Singles' Day in China in November 2014. He compares it to the 37 million orders on Cyber Monday that Amazon received, which he notes is 7.5 times bigger. Hempton notes that it is even bigger than the annual deliveries of Amazon at 244 million.
Hempton next compares the 8.6 billion packages that Alibaba delivered for the year that ended March 31, 2015 with UPS' 2014 delivery of 4.6 billion packages.
Those 8.6 billion packages were handled by 35,000 full-time employees of Alibaba, versus the 435,000 workers and 150,000 robots of UPS. He reckons, "To truly deliver at a larger intensity that Amazon, Alibaba and its outsource network would need more staff or capital (or both) than Amazon and UPS combined.
The last point of comparison is Alipay - the online payment processor of Alibaba - which handled 2.85 million transactions per minute at the peak of Singles' Day. He compares it this time to Visa's estimated 840,000 transaction per minute. The numbers, he says, "puts the US, Europe and most of Asia to shame."
A Barron's article that similarly questioned Alibaba's numbers elicited a response from the company founded by Jack Ma. Alibaba says that most of its shoppers are early adopters of technology who are mostly urban residents and affluent. On the delivery, Alibaba said it has partners handling that.
However, Hempton is open to suggestions from readers of his blog to further bolster his theory that Alibaba is massaging its numbers.
According to Worldmeters, China's current population has risen to 1.4 billion, while that of the U.S. is 318.9 million or just 23 percent of China's population.
Meanwhile, Fortune, in October 2014, placed Alibaba's market cap at $251 billion, surpassing Wal-Mart's $246 billion. In contrast, Amazon's market cap, according to Yahoo Finance, is $252 billion.
Alibaba apparently reflects China's growth story. Although the Chinese giant and the South Asian giant are both slowing down in comparison to previous year, their growth to breaking the amount in an initial public offering and becoming the world's second-biggest economy are indicators of financial and economic might that threatens the largest economy.
Will Hempton be able to burst Alibaba's bubble and "potentially destroy Alibaba's stock completely?
