Anyone else looking at BABA as a long term investment? Share price has dropped 50% in the last year, PE is about 18, half of what it has been recently and half of other e-commerce companies.
It has had recent issues with the government, but looks like investors have reacted to that. They have already had their ‘telling off’ by the Chinese government.
The usual argument for me is China’s middle class is looking to grow, so should be increased revenue for them over the next 5-10 years.
I’ve been watching Alibaba, but already have a Chinese ADR that’s currently suffering. It’s really put me off single Chinese stocks TBH.
Instead I’ve opted for a China ETF - I went with £HMCF which has 10-12% in Alibaba but tracks approx 700 other stocks. Still risky, but think it’s a better option for me.
The earnings were good in my opinion. They were perceived as not good by the market, but the stock has already been beaten down. It has the same price as four years ago and the revenue & profit has moved massively since then. It’s the only stock in the market where the PE is less than the growth rate, that was only happenning in stocks with a single digit PE ratio and 10Y treasury bonds above 6%, it has years to happen. The price at the moment doesn’t make any sense, it will be a 1000$ stock by 2030.
I bought the dip and will look at buying further dips as my guess would be that the evergrande fiasco may pull down the Chinese Market. Even if it doesn’t, its still at a 50 discount from last year
the issue with BABA is the unpredictability of regulation by the CCP
kidnapped Jack Ma, banned the IPO of Ant group payment, cracked down on many BABA practises deemed uncompetitive
what would CCP do next? is anything off the table?
also the potential market shock from Evergrand, along with slowing of chinese economic growth, increase in competition …
I like BABA and think its undervalued tbh. I just don’t know what’s next round the corner