Here’s why the SEEK (ASX:SEK) share price is soaring

The SEEK Limited (ASX: SEK) share price is up around 9% on a potential investment by Alibaba into Zhaopin.

Zhaopin is a huge Chinese employment site which SEEK has a large stake in.

SEEK to benefit from a Chinese investment?

It was reported earlier today by the AFR and Bloomberg that news service The Information had learned that Alibaba is potentially going to invest hundreds of millions of dollars into Zhaopin, which could then lead to Alibaba and Zhaopin working together.

This afternoon SEEK made an announcement somewhat confirming the media speculation.

SEEK said that Zhaopin and its shareholders are holding discussions with a number of parties to assess whether the introduction of new investors could better support Zhaopin’s long term growth aspirations. Those discussions “may or may not” lead to changes with Zhaopin.

The employment business said that it regularly assesses strategic options to maximise the long term growth aspirations of its investments.

Summary

‘Buy on the rumour’ is an investment quote that seems apt in this situation. It could be good news for SEEK – it may be able to realise some value from its Zhaopin investment whilst also benefiting from working with Alibaba. That could be a good partnership. However, the employment market seems tough for SEEK right now and it’s having to heavily invest to grow the rest of the business.

SEEK is a quality business, but it’s not one of the types of ASX growth shares that I like to look at. I prefer businesses that are steadily growing profit whilst also investing in research and development. Pushpay Holdings Ltd (ASX: PPH) is a good example of this.

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At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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