Bat Stocks: What They Are, How They Work

What Are BAT Stocks?

BAT is an acronym referring to three of the largest tech companies in China: Baidu Inc. (BIDU), Alibaba Group Holding Ltd. (BABA), and Tencent Holdings Ltd. (0700.Hong Kong, TCEHY). These stocks are frequently compared with the FAANG stocks in the United States: Meta, formerly Facebook (META), Amazon (AMZN), Apple (AAPL), Netflix Inc. (NFLX), and Alphabet (GOOG).

Understanding BAT Stocks

As is usually the case in the financial world, there are competing attitudes in regard to the value of BAT stocks. Many commentators cite China's rapid economic growth and growing consumer base as signs that BAT presents a solid investment opportunity. Other investors bullish on BAT note that Chinese companies have a larger potential domestic market and have pulled ahead of American firms in some areas, such as mobile payments.

Skeptics, however, point out that Chinese stocks are frequently subject to speculative swings, and that tech is a frothy sector in any case. These investors would likely claim that both FAANG and BAT stocks are overvalued.

Setting aside opinions on the future of BAT stocks, let's take a look at these companies' history and where their finances stand as of 2021.

Baidu (BIDU)

Baidu, co-founded by Robin Li and Eric Xu in 2000, is the most popular search engine in China. According to the company, Baidu's portfolio of products and services reaches over one billion devices each month. Baidu has been listed on the NASDAQ since Aug. 2005 and was dual-listed on the Stock Exchange of Hong Kong Limited (SEHK) in March 2021.

It offers an encyclopedia similar to Wikipedia, though editing permissions are more tightly controlled. Other services include maps, social media, and music. The company also researches artificial intelligence and self-driving cars.

As of Aug. 2021, Baidu controls 76.91% of the domestic market share in the search engine industry. Its market cap stood at $58 billion in Sept. 2021. The company brought in roughly $16.4 billion in revenue in FY2020, a slight decrease from 2019's revenue of $16.5 billion.

Robin Li, one of the company's co-founders, has served as CEO of Baidu since 2000.

Alibaba (BABA)

Alibaba Holding Group Ltd. (BABA), sometimes referred to as "China's Amazon," is a multi-faceted company comprised of core commerce, cloud computing, digital media and entertainment, and innovation initiatives. Alibaba's e-commerce firm operates via two main online portals: Taobao, for consumer-to-consumer commerce, and a business-to-consumer counterpart, Tmall.

The company also created Alipay, which provides payment other financial services for consumers and merchants that operate on its platforms.

According to the company, Alibaba was founded in 1999 by 18 individuals and led by Jack Ma, a former English teacher from Hangzhou, China. As of June 30, 2021, annual active consumers for the Alibaba Ecosystem reached a milestone of over 1.18 billion, including 912 million consumers within China and approximately 265 million consumers outside China.

As of Sept. 7, 2021, Alibaba Group has a market cap of $476.96 billion. The company reported total revenue for fiscal year 2021 at $109.48 billion in US dollars, a 41% increase from the year before, which stood at roughly $78.98 billion.

Daniel Zhang has served as the company's CEO since 2015.

Tencent

Tencent, founded in 1998 in Shenzen, China, is a multi-faceted tech company whose platform offers numerous products and services including social media, music, web portals, e-commerce, mobile games, internet services, payment systems, smartphones, and multiplayer online games. Tencent is also the owner of WeChat, a messaging service with more than 1 billion users per month.

The app supports a popular payments service as well as a number of other features, leading FastCompany to call it China's "app for everything." One notable multiplayer online game owned by Tencent is Clash of Clans, which boasts tens of millions of users. 

As of Sept. 7, 2021, Tencent has a market cap of $646.74 billion. The company reported revenue of $74.69 billion in US dollars in FY 2020, and $58.46 billion in FY 2019, marking a 27.7% increase.

Pony Ma, one of the company's co-founders, serves as the Tencent CEO.