What Are BAT Stocks?
Let me explain BAT stocks directly to you: BAT is an acronym that stands for three of the biggest tech companies in China—Baidu Inc. (BIDU), Alibaba Group Holding Ltd. (BABA), and Tencent Holdings Ltd. (0700.Hong Kong, TCEHY). You can think of them as the Chinese counterparts to the FAANG stocks in the U.S., which include Meta (formerly Facebook, META), Amazon (AMZN), Apple (AAPL), Netflix Inc. (NFLX), and Alphabet (GOOG).
Understanding BAT Stocks
In the financial world, opinions on BAT stocks vary, and I'll lay them out impartially for you. Many point to China's fast economic growth and expanding consumer base as reasons why BAT offers a strong investment. Supporters also highlight that Chinese firms have a massive domestic market and lead in areas like mobile payments, often ahead of American companies.
On the other side, skeptics warn about the speculative swings in Chinese stocks and the overall frothiness of the tech sector. They argue that both FAANG and BAT might be overvalued. Putting aside these views, let's examine the companies' histories and their financial standings as of 2021.
Baidu (BIDU)
Baidu was co-founded by Robin Li and Eric Xu in 2000, and it's the leading search engine in China. The company claims its products and services reach over one billion devices monthly. It has been listed on NASDAQ since August 2005 and added a dual listing on the Hong Kong Stock Exchange in March 2021.
Beyond search, Baidu offers an encyclopedia with controlled editing, maps, social media, music, and research in artificial intelligence and self-driving cars. As of August 2021, it held 76.91% of the domestic search engine market share. Its market cap was $58 billion in September 2021, with FY2020 revenue at about $16.4 billion, down slightly from $16.5 billion in 2019. Robin Li has been CEO since the start.
Alibaba (BABA)
Alibaba Group Holding Ltd., often called China's Amazon, covers core commerce, cloud computing, digital media, entertainment, and innovation. Its e-commerce operates through Taobao for consumer-to-consumer sales and Tmall for business-to-consumer.
It also runs Alipay for payments and financial services. Founded in 1999 by 18 people led by Jack Ma, a former English teacher from Hangzhou, Alibaba reached over 1.18 billion annual active consumers by June 30, 2021, with 912 million in China and 265 million abroad. As of September 7, 2021, its market cap was $476.96 billion, and FY2021 revenue hit $109.48 billion, up 41% from $78.98 billion the previous year. Daniel Zhang has been CEO since 2015.
Tencent
Tencent, founded in 1998 in Shenzhen, China, provides a wide range of services including social media, music, web portals, e-commerce, mobile games, internet services, payment systems, smartphones, and multiplayer online games. It owns WeChat, a messaging app with over one billion monthly users.
WeChat includes payments and other features, earning it the label of China's 'app for everything.' Tencent also owns games like Clash of Clans with tens of millions of users. As of September 7, 2021, its market cap was $646.74 billion, with FY2020 revenue at $74.69 billion, a 27.7% increase from $58.46 billion in 2019. Pony Ma, a co-founder, is the CEO.
Key Takeaways
- BAT stocks refer to Baidu Inc., Alibaba Group Holding Ltd., and Tencent Holdings Ltd., China's largest tech stocks.
- They are often compared to U.S. tech giants like Meta, Apple, Amazon, Netflix, and Alphabet.
- Baidu, founded in 2000, dominates China's search engine market.
- Alibaba runs e-commerce platforms Taobao and Tmall, plus Alipay.
- Tencent owns WeChat, with over a billion users, and various games and services.
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