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BAT refers to Baidu Inc., Alibaba Group Holdings Ltd., and Tencent Holdings Ltd. These are the three most extensive internet stocks of China and are often linked to Alphabet Inc., the Google subsidiary, Amazon.com Inc. and Facebook Inc.
Bats are also compared widely to FANGs or the variations that contain Netflix Inc., Amazon, Facebook, and Alphabet.
Numerous media heads and commentators often compare BAT Stocks' success relative to the American counterparts, including FANGs or FAANGs. Here is a breakdown of the financial metrics of BATs, as of 2020 March. The sceptics pointed out Chinese stocks are highly subjected to speculative swings, and tech stands as the sector with higher pricing for any case. For the people considering FANGs overvalued, BATs have an even higher value than that. In contrast, the Chinese companies also have a larger domestic Market and outshine the American firms in some areas, like mobile payments.
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Baidu stands as the largest search engine in China. Since Google left China in 2010, the Chinese companies were left with relatively lesser competition to grow. Baidu Inc. now controls around 72% of the Chinese domestic market share. Baidu offers an encyclopedia similar to Wikipedia, but in that, the editing permission is managed more strictly. It also provides other services like social media, maps, and music. The company also researches self-driving cars and artificial intelligence.
This is an eCommerce firm that mainly operates in two online portals, which are Taobao and Tmall. Taobao offers consumer-to-consumer commerce, and Tmall offers Business-to-Consumer service. Alibaba Group also developed Alipay, a prominent and successful payment service that it offers as Ant Financial's subsidiary. Alibaba also owns the South China Morning Post and has a cloud computing division.
Tencent is the holder of WeChat, which is a primary messaging system with around 1.2 billion users. This application of Tencent also supports a superior payment service and various other features leading the FastCompany to Call it the app for everything for China. Tencent also owns successful massively multiplayer online games like Clash of Clans, boasting around 10 million users.
The current Chinese market downturn mainly caused by the US-China trade war resulted in a significant fall in BAT stocks' price. The impact is also expected to get adverse with the worsening trade war and negatively impact the BAT stocks. However, they do not get impacted widely otherwise with US trade.
The benefit of Chinese internet stocks like BATs is that they offer a clear 15-year growth runway until reaching the US's saturation levels. Mainly due to their higher growth and more enormous moats, the valuation is reasonable for BATs. Still, Investing in BATs other China-related stocks is not suitable for everyone, but the opportunity is there to accept some added risks.