Reportedly, Alibaba Group Holding Limited (NYSE:BABA) has acquired an open source big data firm, Data Artisans, for a total of €90 million ($103 million).
Berlin-based Data Artisans provides distributed systems and large-scale data processing solutions for enterprises. The startup offers its dA Platform, which consists of Apache (NYSE:APA) Flink and dA Application Manager. Its customers include Netflix (NASDAQ:NFLX), ING and Uber. The Chinese e-commerce giant has been working with Data Artisans since 2016 and is one of the biggest users of Apache Flink.
With the buyout, Alibaba aims to accelerate data-processing technologies and further develop a collaborative environment for developers to enable real-time applications for modern enterprises.
Deal Rationale
Open source prospects have increased hugely over the past few years. Now-a-days, enterprises need a platform through which they can communicate and collaborate.
Data Artisans is a firm that has vital platforms like Apache Flink and dA Application Manager, designed to stream analytic workloads on distributed systems, including Hadoop clusters and cloud-based systems.
At a time when Alibaba is focused on cloud business, streaming services and other growth areas, expanding into open source and infrastructure technology makes complete sense.
The deal will also help Data Artisans with the required funds and additional resources, helping it to market the business and enterprise segments.
Bottom Line
Alibaba has introduced several products and enhancements over the past few years. The company has invested in big data and AI technologies. It has expanded itself on a global basis. We consider this to be a real differentiator, which gives it a competitive advantage.
In this regard, acquisitions and partnerships have helped the company in shaping its growth trajectory and diversifying business. In 2017, Alibaba had invested in a database management system MariaDB. The deal has seen the two companies work together on new products for the community.
However, the U.S.-China trade war has taken a toll on Alibaba, hitting its share price largely. The company's shares have lost 19.4% in the past year compared with the industry’s decline of 7.1%.
However, Alibaba’s cloud computing has significant growth opportunities, driven by robust product portfolio, strengthening IoT capabilities and key offerings. Given the growing position of Alibaba’s cloud business in China and aggressive international expansion strategies, we believe that cloud computing will be one of the major growth drivers in the long run.
Alibaba Group Holding Limited Price and Consensus
Alibaba Group Holding Limited Price and Consensus | Alibaba Group Holding Limited Quote
Zacks Rank & Stocks to Consider
Currently, Alibaba carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include TripAdvisor, Inc. (NASDAQ:TRIP) , Groupon, Inc. (NASDAQ:GRPN) and Wayfair Inc. (NYSE:W) . While TripAdvisor sports a Zacks Rank #1 (Strong Buy), both Groupon and Wayfair carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for TripAdvisor, Groupon and Wayfair is currently pegged at 14.1%, 3% and 18%, respectively.
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