Cumberland Advisors Market Commentary – Singles’ Day and Alibaba

Author: Leo Chen, Ph.D., Post Date: November 10, 2020
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November 11 is Singles’ Day in China. It is an unofficial shopping holiday that was started by Alibaba in 2009. It is called Singles’ Day because the repeated number “1” in “11.11” refers to single people in Chinese. Although Singles’ Day is often compared to Black Friday in the US, it is actually more similar to Cyber Monday, since it is an online shopping holiday.

Market Commentary - Cumberland Advisors - Singles’ Day and Alibaba (Leo Chen)

Chart 1 shows annual Singles’ Day gross sales since inception. While Singles’ Day had only CNY 52 million sales in 2009, equivalent to $0.01 billion, it grew to $38.4 billion in 2019. The compound annual growth rate (CAGR) is 135.15%. Currently, Singles’ Day online sales surpass by miles those of the US’s Black Friday, Cyber Monday, or any other 24-hour shopping campaign, making it the biggest shopping holiday in the world. With more than half a billion shoppers participating, sales hit $1 billion in just 68 seconds last year. The Chinese e-commerce giant has hosted a number of celebrities, including Taylor Swift, to promote the shopping holiday, as well. Many internationally renowned brands have joined the Singles’ Day platform. Kim Kardashian, for instance, put her fragrance brand KKW on Tmall last year.

CAGR 135.15%

Singles’ Day and Alibaba - Leo Chen - Chart
Chart 1. Annual Singles’ Day gross sales in billion US dollars

 

Undoubtedly, the success of Singles’ Day has become a major chapter in Alibaba’s legendary storybook. But how does Singles’ Day affect Alibaba’s stock performance? Our research finds Singles’ Day to be a good example of the “buy the rumor, sell the news” type of event. Please see Table 1 below. If we compare Alibaba’s January 1 – November 11 return to the company’s return for the entire year, performance through November 11 has been better than full-year performance by 4.44% on average since Alibaba’s IPO in 2014; only 2019 saw a positive post-Singles’ Day performance.

Year 1.1-11.11 Return 1.1-12.31 Return
2014 26.90% 10.70%
2015 -21.40% -21.55%
2016 23.01% 14.50%
2017 110.40% 94.62%
2018 -21.13% -25.36%
2019 36.91% 55.16%
Average 25.78% 21.34%

Table 1. Alibaba stock annual performance leading up to Singles’ Day

Alibaba added a new sales window from November 1 to 3 this year, hoping to provide new companies and small businesses the opportunity to showcase their products. With 250,000 brands and 800 million consumers expected this year, we will soon find out whether COVID-19 has had any impact on Singles’ Day growth.

Leo Chen, Ph.D.
Portfolio Manager & Quantitative Strategist
Email | Bio

Note: Data for chart & table from Bloomberg as of November 6th, 2020.

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