Alibaba Stocks Slips Despite Car Vending Machines, Video Content Deals

Shares of Alibaba (NYSE:BABA) were down more than 2% in morning trading Thursday, despite the emergence of several new stories involving the Chinese e-commerce giant—including details of its plan to build vending machines for cars and its new video content licensing deals.

First, we learned more about Alibaba’s deal to help Ford (NYSE:F) sell electric vehicles in China. When Alibaba announced the deal last week, it hinted at using large “vending machine” style buildings to help with sales, and today, the company revealed exactly what that experience will look like.

Alibaba’s vehicle vending machines do quite a bit more than your traditional candy dispenser. In fact, customers can use the Taobao mobile app, which uses facial recognition software, to arrange a test drive.

Customers then head over to the vending machines, scan their face, and receive their desired test vehicle. These tests can last up to three days, after which the car can be purchased through Taobao or returned to the vending machine, and another model can be tested.

Of course, allowing just about anyone to test drive a car for three days would be relatively risky. Alibaba is relying on its own financial services unit to verify and track drivers. Customers must be Alibaba Super Members and have to reach a certain level on the Zhima credit-scoring platform.

The company said that it will open two of its new vending machine stores in January, with one location in Shanghai and another in Nanjing. Eventually Alibaba intends to open “dozens” of the stores throughout China.

Alibaba has roughly outlined its plans to integrate its e-commerce services with new-age brick-and-mortar concepts, but these car vending machines are one of the first clear manifestations of the strategy.

In a different vein, the company flexed its video content muscles with a pair of new licensing deals. Indeed, Alibaba announced that its video streaming service, Youku Tudou, just inked deals with Comcast’s (NASDAQ:CMCSA) NBCUniversal and Sony’s (NYSE:SNE) Sony Pictures Television.

The multiyear agreements give Youku users access to hundreds of films from the two studios, according to a company statement. Subscribers will also get faster access to newly released films, including Blade Runner and Jumanji: Welcome to the Jungle.

“I am confident that expanding our relationships with more international studios will further enhance our platform’s penetration into the home entertainment business and push the online video,” said Youku president Yang Weidong said.

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The deals are another sign that Alibaba is willing to spend plenty of cash on its entertainment and media units, which management has identified as key growth drivers outside of its core e-commerce business. Meanwhile, a deal with Youku represents a significant expansion into the Chinese market for both NBCUniversal and Sony.

Nevertheless, Alibaba shares briefly dipped to an intraday low of $169.91, or about 3.7% lower than Wednesday’s close, on Thursday morning. The stock has since rebounded a bit, but shares are on pace to end morning trading in the red.

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